By Condo Culture
This week, our newest Condo Culture Expert and Sales Representative Raj, walks you through exactly how HELOCs work, their benefits and how if used correctly can help you invest in real estate.
Condo investing done right has the potential to generate enormous returns on your investment. Using tools like Home Equity Lines of Credit (HELOCs) allows you to leverage the equity in an existing property to easily access the funds required to purchase other investments.
If you have owned real estate for a while, whether a house or another investment property, chances are it has appreciated in value and has some equity in it. Many lending institutions will allow you to borrow a percentage of this equity (the value of your home minus your outstanding mortgage) through a HELOC.
Home Equity = Current Appreciated Value - Mortgage Balance
While rates on HELOCs may be slightly higher than traditional mortgages, they are still much lower than other types of credit and provide more flexible access to cash. With the value of real estate in K-W continuing to appreciate, there is strong potential to make significant returns on borrowed HELOC funds by investing in a strong cash flow investment property. Since you also don't have to save up for a down payment, HELOCs allow you to invest in the market sooner. With HELOCs you have the ability to use and repay what you want, when you want, without penalty and only pay interest on the funds you use. In addition, interest paid may be deducted from your personal tax return.
This week's featured listing Unit 603 at 155 Caroline Street would make an awesome investment property.