equity cash out - Posted by David M. luoto

Real Estate Investing Real Estate Financing
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Posted by Ronald * Starr on June 30, 2001 at 13:07:34:

David M. Luoto------------------

What’s the rush? Wait a month and your property will double in value. Then take out the equity.

Wait a minute, I think that was a joke. But seriously, David, what is your rush? If you had the cash now, what would you do with it? Do you really have a plan, a program you are working? Or are you just eager to get rich with real estate and are kind of trashing around?

Now, to take your question seriously, and I am very tempted not to do so, one way is to borrow the money, secured by the equity. No institutional lender will loan to you. No regular hard money lender will loan to you. Who might loan to you? A friend, relative, or some entity that you control, such as a 401K plan or other retirement plan. But, would you want to do this? Such a loan would be very risky, since there is no excess equity to protect the lender. Since you just bought the property, we don’t see proof that you are a good manager. How do we know you won’t lose the property on foreclosure in 9 months?

Now, if you can somehow make your property more valuable, by raising rents, by fixing it up, by solving any problems it may have that restrict it’s value, that would be something else again. Get the equity position up to 35, 40% and then you are ready to withdraw money for other investments.

Meanwhile, keep saving your pocket change, maybe you will find a cheapy deal you can buy with nothing down.

Good InvestingRon Starr****

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equity cash out - Posted by David M. luoto

Posted by David M. luoto on June 30, 2001 at 12:08:34:

I just bought my first investment property and I have about 10% equity in it. Is it possible to get the equity out without it costing me a bundle. I only closed on the property 3 days ago.

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Lack of forethought? - Posted by Nate(DC)

Posted by Nate(DC) on July 01, 2001 at 12:23:42:

David,

Why did you buy the property? What could have happened in 3 days that made what was a good decision (invest $X in this property) now not a good one ($X would be better served some place else)?

Regardless, I think Ron’s advice is on point. You will not be able to access the top 10% of equity on an investment property through any sort of conventional lender. You could always try to find a buyer willing to pay full price for the property with no closing help, but that might take a while. That’s why a lot of experienced investors consider the top 10% (or 20%) of a deal to be “air”…

Good luck,
NT

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Re: equity cash out - Posted by Ronald * Starr

Posted by Ronald * Starr on June 30, 2001 at 13:15:49:

David M. Luoto--------

You don’t give us an idea of your overall plan or program, so maybe this idea is not right for you, I don’t know. Certainly I don’t recommend this strongly, but I do want to answer your question.

Suppose you could find a rundown property with equity equal to say 2 or 2 1/2 times your current equity and you could convince the owner that you nice property is a better deal for that person to own – better cash flow probably. So you trade the two properties. Fix up the rundown property and you will have much more equity to work with. Or even just use the current property to secure a note for the downpayment for the new property. The note could be secured by both the new property and the one you already own. This gives the seller of the new property more assurance that you will pay. If you don’t, you lose both properties in the foreclosure.

Actually, come to think of it, the new property does not even have to be a rundown property. Just a good deal that will support all the expenses, including the big loan against it.

Good Investing************Ron Starr