Using my Equity

[Frank Acquafreda]

Hello all, I am just starting out, and looking for my first deal. I want to invest in buy and hold, cash flow properties. I live in Brooklyn,New York and prices I am seeing are CRAZY. I got very lucky and purchased my condo just before the market took off, and it has doubled in value in 2 years. Would it be wise to try and tap the 300k equity to use towards my first deal? Should I sell and buy a triplex? The prices here would make cash flow thin. Just feeling confused about how I should get started. Thanks Frank

[Jeff Stephens]

@Frank Acquafreda What you described in your initial post is exactly what I did (albeit in Portland, OR). My wife and I bought a house for $190k, and by luck a couple years later it was worth $325k, so I extracted some equity through a HELOC and purchased a triplex. In hindsight the triplex purchase itself wasn't a home run (really low cash-on-cash considering I had to put $90k down with conventional financing), but here's why I'm happy I did it:

It got me in the game.

That alone was a huge thing. I had no idea at that time (2006) that a few years later I would be a full-time real estate investor. But I'm fairly confident that if I hadn't had a "just do it" mentality and bought that first property, I might not be an investor today.

I totally agree with @Joe Villeneuve about being careful with your home equity, and I think @Sam B. proposed strategy is a great one too. But probably most of all, I think instead of trying to craft the elusive single perfect strategy, it's important (in my opinion) to simply get started one way or the other and take that first step.

You're at an exciting stage, and I wish you the best!

Jeff