All Forum Posts by: Tony C.

As the value of my rental portfolio increases quite substantially, what would be the best strategies to use the home equity as a financing resource and generates cash flow income? I know in the investment world there is no such things that are the “best”, it all comes with its own risk and reward characteristics. But just want to open my mind and listen to all your personal experience and ideas.

@Steven Griffith Thank you. I called Pentagon Federal Credit Union. They do have HELOC for investment properties, but their policy is that they do not offer this products for people with 4 or more properties including primary residence.

Does anyone know if there is any lenders can provide HELOC using rental properties as first collateral? I have a BOA HELOC for my primary residence, but they do not offer HELOC for rental properties.

@Mark Allen@Gino Barbaro , if possible could you kindly share with me the sample pitch book? Thanks in advance!

@ Joe Villenueve I have not finalized the HELOC terms, but it seems to be quite flexible with no minimum payment and 20 year pack back period.

I have seen a lot of good advices here. I consider myself a risk adverse guy and I am only looking for stable income. Having said that, I knew I am not effectively deploying my available resources so far by keeping debt free and leaving all my home equity 100% idle. I am earning a decent W2 salary and generating some rental income from the 2 fully paid townhome properties. Therefore, I believe I should be in a position to leverage up my balance sheet, grow my real estate portfolio and generate more passive income. The HELOC rate is lower for me now, but I may consider changing it to HEL to fix and lock the rate.

The big question remains what and how to invest. Personally I still like to buy residential rentals like SFH or townhomes in the local market. I do not have time or skills to rehab the house, so I guess I have to buy properties in good shape. The con of this strategy is I am only getting 5-6% gross rental yield. The pro is that it does have tax advantage due to depreciation accounting. Also is it true that I can make up the low yield by growing the rental units thru refinancing as total income or asset value increases? Does BRRR without "Rehab" still work as a strategy?

I am also interested in other ideas which I believe I can generate higher yield, e.g. apartment syndication, crowdfunding, HML. But I know I need to find good reliable partners or vendors.

Jay and Tim, I appreciate the great suggestions from you guys! 

@Tim Puffer Tim, do you develop your own self storage facility or buy them from secondary market? From a financing perspective, I guess it is more difficult to borrow from banks against self storage facility to increase leverage, as compared to borrowing against residential rental property. Correct me if I am wrong.

Thanks, Jay! I never done HML before, what is the best way to start out without getting burned?

I checked with my bank and I should be able to get a new $560K HELOC on my primary home. I would like to get some advice from BP about the investing strategy using the HELOC. I am in 40's and pretty busy with my current job, so I do not have time to spend too much time fixing the houses. My local market is strong, but it is not in metropolitan areas. SFHs and town homes are more common here than multi-family or apartments. I have already had invested in 2 townhome properties with my own capital. and the gross yield is 5-6%. With my new HELOC, I am not sure if there are other options I can do to earn a higher gross yield, say 8% or above on the purchase price. My HELOC rate is prime-0.14% i.e. 4.36%

How would you invest if you are in my situation? 

Hi Thomas, I agree that I should using the equity of my home to get HELOC and invest in more income property. But you were also saying that I should sell my existing rental properties, and buy something with much higher rent to value. What types of income properties can generate a much higher rental yield? I have a full time job so I do not have much time to fix and flip houses. In my local market, it seems 6% gross rent to value is the norm for passive income investors.