Lots of equity, little cash - Posted by Real estate Greenie

import · June 22, 2004, 2:59pm

Posted by Real estate Greenie on June 23, 2004 at 12:48:05:

Thanks for the info. While I was thinking more in terms of residential rentals, commercial is a possibility as well. It’s all about an open mind isn’t it? I’ll go out and get some info on that side of things as well. You can never know too much

import · June 22, 2004, 2:59pm

Posted by Real estate Greenie on June 22, 2004 at 14:59:05:

I have a situation where my family owns 3 houses with a combined equity of 800K. They have been doing nothing with these properites and it seems a complete shame to let it just sit there. Is it best to buy a bunch of properties with little down thus leveraging the equity, or to just outright buy a couple properties? also, am I crazy for even thinking about playing with so little capitol?

import · June 25, 2004, 8:02pm

You have all kinds of money - Posted by Jeff

Posted by Jeff on June 25, 2004 at 20:02:08:

You have about 600k in HELOC’s that I can see…take that money at 4.5% (although variable) and go find some deals you can cash flow a higher leverage rates…put that equity to work!!

import · June 24, 2004, 2:05am

Re: Lots of equity, little cash - Posted by John Katitus

Posted by John Katitus on June 24, 2004 at 02:05:55:

It depends on what you want to do. Personally, I would look at buying an apartment complex. If bought right, there is much better cash flow than single families and all your tenants are in one place. I am not sure that owning a bunch of single family rental houses is a great get rich scheme, and I own 40 of them.

import · June 22, 2004, 9:14pm

Re: Lots of equity, little cash - Posted by sptk

Posted by sptk on June 22, 2004 at 21:14:34:

Equity just serves as collateral for a loan. Rent or your employee income has to pay the loan back. What kind of cap rate is typical on the kind of rentals you are interested in?

If the cap rate is low (less than typical mortgage rates), high LTV is out from the start. I suggest you start out with one rental (building) and try it for a year. By then you will have enough experience to answer this question yourself. Even if you can buy lots of high leverage rentals it may be way more work than you want. You should feel good about your 800K equity, you’ve obviously done some things quite well in life. Lot’s of people couldn’t come up with closing costs and a months carrying costs even if they had the deal of a lifetime sitting there for the taking.
Good Luck,
Speednxs

import · June 25, 2004, 1:45pm

Re: Lots of equity, little cash - Posted by Mike (Seattle WA)

Posted by Mike (Seattle WA) on June 25, 2004 at 13:45:19:

Thanks for the reply. My initial gut feeling was towards this as well. But as I’ve never done this before and all the books I’ve read have suggested starting in SFHs, that is of course where I’ve been thinking I should start. Now with a REI Club meeting complete, this website’s (and others) FAQs, and the info from all these wonderful posts, I’m beginning to see things I never even dreamed of. Some more Background info on me and my situation. I’ve got about 5K in cash reserves (not nearly enough for emergencies.) I’ve got a nearly perfect credit rating (middle around 780) and I’ve got a full-time job where I’ve got some extra play cash coming in every month that can go towards this as well. I’d like if possible to get some cash up front before playing with the equity (just in case I screw up real bad.) My idea has been inspired by all the for rent signs that have been popping up lately. Perhaps giving them a call and looking for a motivated deal that way might be good as well. Other input is welcome. Perhaps I’ll also make a new post higher up so others notice it.

Thanks for the info, keep it up!