Is a Reverse Mortgage a Good Idea to Get Started?

[Kathie Meyer]

I'm new here, but I grew up with a dad who was a real estate broker and funded his retirement with his buy and hold and then carry the contract when sold strategy. I also have education in real estate appraisal.

Anyway, I'm going to finally get serious about real estate as a means to stop working for someone else and have more freedom. I am also working on coming out of a Chpt. 13 bankruptcy that was filed last Oct. in order to save my house because I fell behind when unemployed for a while due to illness. I am literally starting with hardly any cash, but the good news is I have at least $85-60K equity in my home. I owe around $215K. The house still needs to have a second bathroom installed (it has the plumbing) upstairs, and is probably worth $275-$300K as is. I have done a lot of the improvements to this house and property myself.

To raise some cash in this scenario, I've been told that I have to wait until I have two years of on-time payments before I can qualify for a refi with cash out to get the bankruptcy discharged earlier. He said I would have to wait another two years after that to get a HELOC.

But a friend of mine suggested a reverse mortgage which she has and is entirely happy with (I will be 62 in Aug.). I have never seen this suggested as a way to raise cash for investing/paying off the arrears, so I'm wondering if it's a good idea. I've also seen the hard money lending ideas and the company that buys a "piece" of your house, etc. and am curious what more experience investors think about them as well.

Are these avenues worthy of pursuit? Or should I just be patient and keep working on the house I have so that in Oct. 2020 my house will appraise well for the refi with cash out? I understand the market is expected to go south soon, but during the worst of the last recession our area wasn't affected all that much. I live in Port Townsend, WA, a very desirable place for retirees with $.

Thanks!