i know there's an investment forum, but it's dead.

can someone explain using rental property to leverage loan money you can use?

say you own a rental, take out the equity, hope that your rent covers the payments, use the loaned money. then in a few years, refi again, pay off the old loan, use any extra left over?

it's like living on credit but with a low interest rate?

 

You can do that, but you open yourself up to alot of risk. You should draw out a awesome gameplan of what you plan to do with your money before you do anything. Make sure its a bulletproof plan, or you could end up losing alot more then just the money you take out

 

i also feel it to be risky, but don't fully understand why.

my friend is trying to do this and i wanna give him good advice.

on another side, can you buy a bunch of properties with very little down and somehow come out on top?

 

You're just opening yourself up to a lot of risk. What if the rental goes vacant for a few months? What if there is a major repair bill that needs to be footed? Owning a home with 0 equity is always a risk if you can't afford the mortgage payments yourself (before rental income). Not to mention flux in the housing market could impact whether its even possible to cash out in a few years and pay the old loan off.

My $.02 is that there are lots of safe ways to invest in real estate either very long-term, and even occasionally very short-term... they won't produce ridiculous numbers, but they will be reliable. This just looks like working on too many assumptions for my taste.

 

your plan doesnt work if home values dont appreciate in the future. nationally, i believe they are down 4% from last year. some areas may be worse. basically NO APPRECIATION = NO REFI

in addition, to generate cash flow in california right now is VERY difficult. unless you have owned that property for a looooong time now. you are better off doing it in another state, however make sure you keep a good lid on your tenants, cause anytime you get a call its a good $300 out of your pocket, and good luck evictiing someone. without the knowledge of doing so, you can have some mofo up in there for a good 3 months without any ROI.

 

you can buy alot of properties with very little down is you have perfect credit, but why would you buy a bunch of houses with very little down?

Rule 1. If you can't afford it Dont buy it. ( Its like buying a rolex with a financial aid check, and then not eating for the whole time you are in school , just to have the rolex. )

Your time will come where you can buy , and get all the nice things in life, just don't put yourself out as a target to get in over your head. If you buy a house with very little down, where alot of people were getting 100% financing, look at them now, they cant afford the payments, cause they are too high. The less you put down the higher your payments will be each month. There are other creative strategies in which you could invest, but of course comes back to you need money to make money. Do your homework, before you make any decisions. Out of state some areas are great, but how will you manage it? I would suggest start locally if you want to invest just so that yuou can oversee everything, and then when you get better go explore. The first one is always the hardest, it will get easier after that.

 

what other ways can u make money from rental props besides rental income, overall appreciation and helocs?

 

there are many creative strategies that you can use to make money, but that would take hours of explaining to do. I'm no pro, but I have seen alot, and done alot of research, I have a few properties, noting huge, but just do some research, and you can find many different ways besides just income from rental, and appreciation.