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Buying or Selling a Home/rental/investment property

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Expert: - 3/6/2009


Question
My husband and I want to buy a house as an investment/rental property because we are tired of the poor returns on our mutual funds. We don't have much saved to put a down payment down.  Can we borrow from the equity from our own home to buy one?  What steps should we take to find out?  Any tips?  Thank you for your insight.

Answer
Hey, Rita.

Rental properties are great ways to get consistent returns on one's money.

Generally, yes, you can borrow from the equity in your own home to buy another property. Real estate investors and landlords do it quite often, and that is how many people "make a killing" in real estate.

What you have to be wary of right now is the more stringent lending guidelines that banks are using. So the first thing to do is to contact the bank that you've been doing business with all these years and see what kind of guidelines they have for you as a long-time customer.

If they won't, or can't, help you right now, don't be afraid to approach banks where you don't do business. You have some leverage in that you have equity in your own home, and you can always offer to move your bank account, savings account, CDs, etc., from your long-time bank to your new bank. Banks like money, and they like to make money off of money, so use all your money to your advantage.

Hope that helps.

Good luck.

Buying or Selling a Home

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Russel Ray

Expertise

Through home inspections, I provide an education about real estate. I'm one of those rare home inspectors who has been involved in real estate in many different capacities: as a Realtor (in Texas), as a property investor/flipper, as a teacher, and as a marketing expert (for Realtors and home inspectors). I believe that my experience as a Realtor and property investor provides me with a different viewpoint about home inspections in that I work for my Clients, but when there are other people involved in helping my Clients, then I firmly believe in helping them, too. That includes Realtors (both the seller's and the buyer's), repair professionals (e.g., plumbers, electricians, etc.). If I can get all the players (seller, seller's Realtor, buyer, buyer's Realtor, and repair professionals) playing in the same sandbox together to accomplish goals as a TEAM (Together Everyone Accomplishes More), then I believe I have succeeded in my job as a home inspector. My profession is, in my opinion, much more than simply documenting the condition of a property and then take the money and run. I am also a rare breed in that I don't believe that one inspection fits the needs of all Clients, and I have led the industry in understanding that fact. For example, the goals of a property investor are far different than the goals of someone buying a property to live in. The goals of a seller (a pre-listing inspection) are far different than the goals of a buyer (a pre-purchase inspection). To that end, I offer 14 different types of inspections, e.g., STANDARD, LIST, RENTER, BASIC, MAINTENANCE, SPOT, and more. I believe in giving the benefit of the doubt to all professionals in whatever industry they represent until they prove me wrong.

Experience

Over 42 years in all aspects of real estate--building homes, renovating homes, inspecting homes, Realtor.

Organizations
National Association of Certified Home Inspector, Better Business Bureau of San Diego

Education/Credentials
Graduate of Texas A&M University; College Station, Texas

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