What to do with equity of 100k?

Question

I currently have over 100k in equity on my current property. I’ve been thinking about doing a refinance to take that money as a down payment on a duplex(around my area are 250-300 which will have have a down payment of 50-60) which will create immediate cash flow. Is there any other suggestions my investor family would have to do with the money or am i on the right path?

Thank you for your time!

Evan Polaski · Answer

@John Reyes  You may want to look into passive investing strategies then.  There are a lot of experts on here. I will mention that many require you to be an accredited investor.

If you are not one already, then buying single family homes, duplexes, etc can be a great way to grow your net worth until you qualify as accredited.  And honestly, managing your own portfolio is not very hard, or time consuming when you have a dozen or so properties.  But be sure you are going in with renovation dollars accounted for.  If you buy a single family, and are cash flowing pretty well, but then you need a roof, that could take out a full year's worth of profit, and does not really add value when you go to sell.

Evan Polaski · Answer

It all depends on what you are looking for.  What are you looking for out of life?  Do you want to grow your rental property portfolio (I assume you do, since you are here).  A duplex is a great starting ground and can help get your feet wet in the rental property game. But good managers are hard to find (at least for me) with a single 2 family.  So you will either need to be the manager, or will be battling managers to run it for you.

Lastly, when you say $100k equity do you mean the property is worth $100k more than you paid for it, or $100k more than your current mortgage balance?  Typically, although some of the mortgage brokers on here would know better, you can only access up to 80% of that equity.

Evan Polaski · Answer

@John Reyes Any time.  Best of luck!

John Reyes · Answer

@Evan Polaski

You reassured alot of what i was thinking. I’m grateful for your time and experience!

Thank you!

John Reyes · Answer

@Evan Polaski

The overall goal i have is to stop trading my time for money. To be able to create passive income and allowing my money work for me rather than me

working for my money. Becoming a landlord can have it’s incentives however i don’t want that to become my “full time job” as another reason why implementing a great property manager is something i feel like would be a benefit. If there are better routes that i can take i’m open to all suggestions.

As far as the 100k the property was purchased at 65k and the value of it is about 180k. I’m aware of being able to take about 75%-80% of the equity as well.

What to do with equity of 100k?

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