Tag Archive for: equity

HELOC vs Cash Out Refinance

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HELOC vs Cash Out Refinance

Are you thinking about tapping into your home equity? If so, you might be wondering whether or not a HELOC or a Cash Out Refinance is the better choice. Both options have their perks, however one may suit your needs better than the other in 2024. Let’s break down the differences to see which option is best for you! 

What is a HELOC?

First and foremost, what is a HELOC? A HELOC is a Home Equity Line of Credit, or an equity line on your property. It operates like a credit card and you can draw from it as needed by using your home as collateral. To clarify, you only pay interest on the amount you borrow, not on the entire line of credit. Here are some key points about HELOCs:

What is a Cash-Out Refinance?

A Cash-Out Refinance on the other hand replaces your existing mortgage with a new, larger one. Therefore, you receive the difference in cash. This option can be helpful if you need a large sum of money and would prefer a single monthly payment. Here are some key points about a cash-Out Refinances:

Which One is Better for You?

Choosing between a HELOC and a Cash-Out Refinance depends on your financial goals and current market conditions. Here are some scenarios to help you decide:

Choose a HELOC if:

  • Low upfront costs.
  • Flexibility in borrowing.
  • You plan to pay off the borrowed amount quickly.
  • Receive 80% to 85% LTV.
  • Interest on mortgage is 3% to 4% and will not be affected by HELOC. 
  • Less paperwork and closing in 1 to 3 weeks.

Choose a Cash-Out Refinance if:

  • You need a large sum of money all at once.
  • Fixed monthly payments.
  • Payments are included within the life of the mortgage.
  • Receive up to 75% LTV.
  • Interest on mortgage will increase to 7%.
  • More paperwork and closing in 3-4 weeks. 

Conclusion

In 2024, a HELOC often provides more flexibility and lower upfront costs than a Cash-Out Refinance. However, your choice should depend on your specific needs and financial situation. Think about your goals, how much money you need, and how quickly you plan to repay the loan. What works best now might not be the best choice in the future. Therefore, always keep an eye on the market and consult with a financial advisor to make an informed decision.By making the right choice, you can save money, reduce stress, and improve your overall financial well-being.

Need More Information?

If you have questions or want more personalized advice, check out our website or give us a call. We’re here to help you make the best financial decision for your future.

Watch our most recent video to find out more about: HELOC vs Cash Out Refinance

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Top 5 Benefits of Using a HELOC

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Top 5 Benefits of Using a HELOC

Are you considering tapping into your home equity? A Home Equity Line of Credit (HELOC) might be the best option for you. Today we are going to discuss the top 5 benefits of using a HELOC. Let’s dive in! 

First and foremost, what is a HELOC?

First and foremost, what is a HELOC? A HELOC is a Home Equity Line of Credit, or an equity line on your property. It operates like a credit card and you can draw from it as needed by using your home as collateral. To clarify, you only pay interest on the amount you borrow, not on the entire line of credit. Here are some key points about HELOCs:

Top 5 Benefits:

1. Lower Costs

A HELOC often costs little to nothing to refinance. This means you can access your home’s equity without the high fees associated with other types of loans. For example, many HELOCs have low or no closing costs if you keep the loan for a few years. This can save you thousands of dollars upfront.

2. More Funds Available

HELOCs usually allow you to borrow a higher percentage of your home’s value compared to Cash-Out Refinances. For instance, while a Cash-Out Refinance might let you borrow up to 75% of your home’s value, a HELOC can allow you to access up to 85%. This means more money is available for your needs, whether it’s for home improvements, debt consolidation, or other expenses.

3. Keep Your Low Mortgage Rate

One of the biggest advantages of a HELOC is that you don’t have to refinance your existing low-rate mortgage into a higher-rate loan. Let’s say you have a mortgage with a 3% interest rate. Refinancing that into a higher rate to get cash out wouldn’t make sense. With a HELOC, you keep your low-rate mortgage separate, avoiding higher interest costs.

4. Fast and Simple

HELOCs are fast and simple to set up, often with less paperwork than a traditional refinance. You can typically get a HELOC approved and funded in a few weeks, whereas a traditional refinance might take longer. This quick access can be crucial if you need funds quickly for an emergency or a time-sensitive project.

5. No Regrets

With a HELOC, you’re not committing to a new long-term, higher-rate mortgage. This can potentially save you money in the long run. For example, if interest rates drop in the future, you won’t be stuck with a high-rate mortgage. You can pay off your HELOC as needed without the long-term commitment.

Conclusion

In conclusion, a HELOC offers lower costs, more funds, the ability to keep your low mortgage rate, a fast and simple setup, and financial flexibility without long-term regrets. If you’re looking for a smart way to use your home’s equity, a HELOC might be the perfect solution. 

If you have questions or want more personalized advice, check out our website or give us a call. We’re here to help you make the best financial decision for your future.

Watch our most recent video to find out more about: Top 5 Benefits of Using a HELOC

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Real Estate Investing: Leverage Explained

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Real Estate Investing: Leverage Explained

Today we are going to discuss the importance that leverage has in real estate investing. Here at The Cash Flow Company, we see success from the money side because money is the key factor in real estate. The foundation of this business is leverage in order to build portfolios. Learn how it can play a vital role in your investments as well as provide opportunities that accelerate your success. Let’s take a closer look!

The importance of leverage.

Whether there are two properties or 10 properties, it is important to create more leverage over someone else. How can investors take care of their leverage on certain properties or on their portfolio? This can be accomplished by picking one property and focusing on paying it down quickly. In doing so, it will free up the equity in that property, and will provide you with more opportunities as well. 

Let’s look at the numbers!

5 properties

Each  Total for 5 properties
Property Value  $200K $1,000,000
LTV (loan to value) 75% $150K $750K
Equity  $50K $250K

In the world of leverage, an LTV of 75% unfortunately does not free up any equity. This is due to the fact that investors are paying down each property equally as opposed to paying a little more towards a single property. For example, if there was a deal available for $150K, you would not have enough equity available to purchase the property. Just to clarify, lenders will not lend over 75% on an investment property. How can you set yourself up for success while using the equity in your properties? The answer is by focusing on paying one property down faster. In doing so, you will in turn free up the equity Remember, those who will accelerate in this business are those who create financial flexibility. 

Contact us today! 

Use your equity to your advantage and create the leverage that you need to succeed! Do you need some guidance on where to get started? Here at The Cash Flow Company we can help you get on the path to success! Contact us today to find out more about Real Estate Investing: Leverage Explained<b>.

Watch our most recent video to learn more about Real Estate Investing: Leverage Explained</strong>

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How to Finance a BRRRR Investment

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How to Finance a BRRRR Investment

Today we are going to discuss how to finance a BRRRR investment!  Just to clarify, BRRRR stands for buy, rehab, rent, refinance, and repeat. Financing is often the biggest roadblock that investors face when using the BRRRR method. However, by using it correctly, you can put little to no money in and win the real estate investing game.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

Finance a BRRRR investment today by making sure that you find under market value properties and can qualify for a long term loan. In doing so you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to learn more about How to Finance a BRRRR Investment.

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Why the BRRRR Method Works in 2024

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Why the BRRRR Method Works in 2024

Today we are going to look at why the BRRRR method works in 2024! Just to clarify BRRRR stands for buy, rehab, rent, refinance, and repeat. This method has returned strong in 2024, and is the perfect way to build your portfolio of rentals. By using BRRRR and using it correctly, you can put little to no money in and win the real estate investing game. Would you like to learn more about building $500K in only 3 years? Let’s take a closer look!

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by understanding why the BRRRR method works in 2024. By finding under market value properties and qualifying for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to find out more about Why the BRRRR Method Works in 2024.

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The BRRRR Method Returns Strong in 2024

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The BRRRR Method Returns Strong in 2024

What is hot today in real estate investing? The answer is BRRRR! It stands for buy, rehab, rent, refinance, and repeat. This BRRRR method returns strong in 2024, and is the perfect way to build your portfolio of rentals. By using it correctly, you can put little to no money in and win the real estate investing game.

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

It’s all about the numbers!

Both hard money lenders and private lenders look at properties to determine what the after repair value will be. In order to be successful using the BRRRR method, the ARV should be between 75% to 80%. Traditional lenders on the other hand will look at loan to value when looking at a property. It is important that real estate investors know what the loan side looks like for a property before jumping into a deal. Remember, the lower the ARV, the lower the loan, and the less you owe. By working with investor friendly loans, knowing your pieces, and knowing your numbers, you will be successful.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as to when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by using the BRRRR method. By making sure that you find under market value properties and can qualify for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video about The BRRRR Method Returns Strong in 2024.

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Friday Fun: So Much Cash Flow

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Friday Fun: So Much Cash Flow

Friday Fun: So Much Cash Flow

Ready to boost your cash flow and maximize your equity?Our team can show you how using our Quick To Buy, Quick to Refi strategy. Contact us today!

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