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All Forum Posts by: Maggie OReilly

Maggie OReilly has started 1 posts and replied 2 times.

Originally posted by @Mack Benson:

Generally there are two options with a lot of equity in a personal residence, a cash-out refinance or a HELOC. The HELOC is nice because you'll only need to pay on it when you use it whereas a refinance you have to start paying on it as soon as it closes.

When underwriting a rental you will budget for vacancy and repairs. If the income minus the expenses (not only the expenses but also the reserves) cover the subject property and the debt service on the HELOC you are in good shape. Dave Ramsey is great for people who don't know how to manage their finances and to get them out of a situation they created for themselves but his methods are not very conducive for building wealth. Leverage is one of the most powerful tools in the real estate investors toolbox as long as it's utilized wisely.

Thank you for your response Mack! My husband and I are buying our first rental now (closing in the next few weeks) and it took years of saving to get 50k in cash, so I just want to explore different options as we keep looking for another property. Our interest rate is 2.62% but my husband still thinks we should pay it off as soon as possible. I’m trying to explain that our money would be better served going toward our next rental, since the rate is so low.  Thanks again for your input. 

I own my home after paying the mortgage off in 7 years. I have $200k+ in equity. I am thinking about trying to use it as leverage to buy a rental. I am a product of Dave Ramsey so the idea of levering what I’ve just worked my butt off to pay for is scary. I also have no other debt and the idea of carrying debt scares me. Has anyone done this? Thoughts? How do you get over the idea of possibly having to float mortgages if there are no tenets or if you make a bad choice/deal?