By that point your savings has risen and your even more appealing to the banks by now having assets to use as collateral.

However, it's important to consider the risks as well as the potential benefits before making a decision.One of the main risks of using home equity to invest in a rental property is that you are using your primary residence as collateral for the loan.

Another possible better alternative is business financing or a portfolio loan with these properties as collateral.

A mortgage is granting of the collateral, the note is the IOU thus the note has the full loan terms on it, the mortgage reference those terms to structure the collateral obligation.In the court record the mortgage and note are both submitted as function of the foreclosure complaint.

No, you would not be able to buy it with financing and tear it down....unless you wouldhave enough equity in your property to finance the second house with the land included, otherwise you would be destroying the collateral.

I'd say it was a plus, but won't show up for much on the appraisal due to lack of comps, the down side.The pool heater should be outside or in a seperate area, if the pump goes out the water won't circulate, the heater has no water and it turns into a fire box.....had a total loss on my collateral that way.If someone didn't want it, it could be filled and turn the place into a media room.

As noted above I had great Mentors back then Living on the Cheap and Literally putting every penny available and sometimes using primary residence as Collateral ."

My thought is that it should be very easy to get deep discounts and also be able to buy it on contract because the seller has already or will be paid by the lender.My only area of concern is that this is the lenders collateral, so they will be concerned about making sure their collateral is returned to the state or better that it was in when the seller took out the loan.

@Charles Worth   The assumption that the assets rise in value is the issue.. some markets that happens other markets just trundle along and market really never moves appreciably and depending on value of collateral sometimes small mortgages can be tough to get..

Ask your lawyer and the bank about a hypothecation - it involves one party who is not the debtor on a promissory note (you and your wife) pledging property they own (your 1/2 interest in the property) as collateral for the debt of another (the parents).If you reach out to enough banks, you can probably find one willing to do a hypothecation.