QUOTE (jessandy @ Oct 22 2009, 08:47 PM) I was under the impression that Real Estate is such a great investment because of the leveraging capabilities (paying 10% down gives me 30% ROI instead of paying 100% down and getting 3% ROI). Its the only investment that banks will give you their money for....why don`t you want to leverage out?
Its rarely a problem (in my brief Real estate experience) to use a Home Equity Line of Credit as a down payment. That`s how I bought my last property with no lender issues. This allows me to use my one HELOC to buy several properties at 20% down instead of buying 1 property at 100% down.
You don`t need cash for a downpayment, you can just use your HELOC as the downpayment, especially if you don`t already have many rental properties, it should be easy.... is there something I`m missing?
why don`t you save the rest of your LOC and only use part of it for this next property as a downpayment? (perhaps a LOC secured against your house is different from a HELOC?? if so, transfer it over)
Interesting points. I`m a bit confused, though. I`d say I am leveraging by using the LOC to buy the house -- paying 0% down and getting a cashflowing property. After this deal, I`ll still have a healthy amount unused/available through the LOC, so I`m not maxing it out with the one purchase.
For me, with this particular deal, I decided to finance the entire cost using the LOC because I want the option of paying interest-only, to keep the monthly costs as low as possible to start off.
Its rarely a problem (in my brief Real estate experience) to use a Home Equity Line of Credit as a down payment. That`s how I bought my last property with no lender issues. This allows me to use my one HELOC to buy several properties at 20% down instead of buying 1 property at 100% down.
You don`t need cash for a downpayment, you can just use your HELOC as the downpayment, especially if you don`t already have many rental properties, it should be easy.... is there something I`m missing?
why don`t you save the rest of your LOC and only use part of it for this next property as a downpayment? (perhaps a LOC secured against your house is different from a HELOC?? if so, transfer it over)
Interesting points. I`m a bit confused, though. I`d say I am leveraging by using the LOC to buy the house -- paying 0% down and getting a cashflowing property. After this deal, I`ll still have a healthy amount unused/available through the LOC, so I`m not maxing it out with the one purchase.
For me, with this particular deal, I decided to finance the entire cost using the LOC because I want the option of paying interest-only, to keep the monthly costs as low as possible to start off.