Why 80% of Millionaires Come From Real Estate

       

I had a real estate coaching student come to me recently and asked me if she should invest her equity of her home into other real estate.

And it's a question she was getting from her clients as well.

So I explained this to her in a story form, so she could explain it to her clients as well.

So let's assume that you had $400,000 in equity in your home. And you leave $200,000 equity in your home and you pull $200,000 out.

Now, how do I pull it out? I refinance it or I get a HELOC loan for that $200,000.

So now I have $200,000. Of course, I'm paying interest on it. It's not free money. Let's assume I'm paying 5.5% interest today.

With that 5.5% interest, I now have to beat that rate of return in order to make money.

So let's assume then I go out and I take that $200,000 and I find an investment property. Maybe it's a duplex or a triplex, and I spent $700,000 on it.

That's reasonable because they gotta put 25% down generally on investment...

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