Leverage your home equity
to buy an investment
property
Available equity for
investment property
Investing in real estate has created the most millionaires.
Here's how it works.
1. It can create monthly cash flow when rental income exceeds total expenses.
2. You accumulate equity through mortgage payments and home appreciation.
3. Interest paid and property taxes can be written off on your taxes each year to get a bigger refund
4. Income and equity from one property can be used to purchase more cash flowing properties
Tables are for illustration purposes only and are not meant to be relied upon for investment decisions. Consult your loan officer for the most accurate figures. Table data assumes a $350,000 home purchased with 20% down, a 6.00% interest rate, 30 year loan term. $70,000 down payment and $30,000 in renovation expenses financed by a home equity loan with a 20 year term at a 8.5% APR. Other costs and figures include $2,750 annual property taxes, $792 annual homeowner’s insurance policy, $2,400 annual maintenance costs, $3,200 monthly rental income, and $350,000 starting home value, each increasing at a 1.5% annual rate. Tax benefits estimated at $1,150 in the first year, scaling down by 5% per year.
Investment property initial expenses
& cash flow
Tables are for illustration purposes only and are not meant to be relied upon for investment decisions. Consult your loan officer for the most accurate figures. Table data assumes a $350,000 home purchased with 20% down, a 6.00% interest rate, 30 year loan term. $70,000 down payment and $30,000 in renovation expenses financed by a home equity loan with a 20 year term at a 8.5% APR. Other costs and figures include $2,750 annual property taxes, $792 annual homeowner’s insurance policy, $2,400 annual maintenance costs, $3,200 monthly rental income, and $350,000 starting home value, each increasing at a 1.5% annual rate.
Tables are for illustration purposes only and are not meant to be relied upon for investment decisions. Consult your loan officer for the most accurate figures. Table data assumes a $350,000 home purchased with 20% down, a 6.00% interest rate, 30 year loan term. $70,000 down payment and $30,000 in renovation expenses financed by a home equity loan with a 20 year term at a 8.5% APR. Other costs and figures include $2,750 annual property taxes, $792 annual homeowner’s insurance policy, $2,400 annual maintenance costs, $3,200 monthly rental income, and $350,000 starting home value, each increasing at a 1.5% annual rate.
Speak with your advisor
We've teamed up with ACME Mortgage to help you plan your next move – from affordable tools to expert local agents ready to support you every step of the way.
Speak with your advisor
We've teamed up with ACME Mortgage to help you plan your next move – from affordable tools to expert local agents ready to support you every step of the way.
Financing your investment property purchase
using your home equity
Now is where we turn equity into income. A cash out refinance or home equity loan will let you tap into your home's equity for the initial expenses and some financial cushion. Always consult your loan officer to run the numbers.
Finance Your Down Payment & Costs
Consult with your loan officer to run the numbers and determine whether a HELOC, home equity loan, or cash out refinance is the best option for you.
Buy the Investment Property
Next, find a the home you want to buy. Look off-market or hire an experienced realtor to find the best deals. Oftentimes you may use the expected rental income to help qualify for the mortgage.
Manage Rental
Each type of rental comes with its own expenses and management. Plan accordingly. Short term rentals, for instance, will have higher income but also higher cleaning fees and repair costs.
Next Steps
Crunch the numbers with your loan officer
Scheduling a 30 minute call with your loan officer can help you estimate the potential costs of tapping into your home's equity and buying an investment property.
Find the perfect investment property
Search for homes in your area, check popular real estate investor sites like Roofstock, or contact a local real estate agent who specializes in investment properties.
