Newbie seeking advice.

[Ralph Christian Mark Aquino]

Hello everyone. My name is Mark. I am new to the BP community. Very excited! Very new to everything. So that would explain the nerves of uncertainties running through. I have a very specific goal of investing in real estate through the equity of my home. I would really appreciate if anybody can clear a few things for me to provide enlightenment. Is pulling equity out of my current home ($100k available) a good idea? And if it is, which route would be good? Cash out refi vs HELOC vs Home Equity Loan. Any suggestions also for a company or lender that services my needs. I have done my due diligence of googling and youtubing information but I would like to supplement it with real life experience from successful investors like you. I would really really appeciate any useful information.

[Andrew Kerr]

@Ralph Christian Mark Aquino I suspect you will get a wide range of answers based on personal preference here. Four years ago I would have said get a HELOC and invest that $100k like crazy. Today, I would be more cautious as I feel rates will be going up over the next few years (and HELOCs have adjustable rates), and as I feel the market is very hot (my Uber drivers talk about investing in Real Estate all the time, reminds me of that old saying when your cab driver talks about investing in something you know its time to get out). I am personally trying to deleverage and build reserves for a down turn.

Doing a cash out refi or HELOC would depend on what your current financing looks like, what your credit and LTV would be and new financing terms. A lot of folks like the flexibility of a HELOC as you can borrow and pay it down, then borrow again.

One last thing to keep in mind, make sure your rate of return on an investment would be greater than what it would cost you to borrow the money. As an example, if you borrow money on the HELOC at 5%, make sure your deals make you at least 5% cash on cash. Ideally you need a big spread for rate increases on your line of credit. Make sure you cash flow can service the debt and you have profit left over. Don't go for an appreciation only play.

Good luck!