Podcasts about home equity line of credit

Are you sitting on a gold mine without even knowing it? In this episode of State 48 Homeowner, we show you exactly how to leverage your home's equity for maximum financial gain—whether it's paying off high-interest debt or investing in your future through real estate. Discover why now might be the perfect time to tap into your home's hidden potential. Key Topics & Takeaways Understanding Equity: See how to calculate your equity and turn it into a real financial asset. Debt Elimination: Reduce (or eliminate) high-interest credit card debt and personal loans by using lower-interest home equity options. Investing Strategy: Discover how you can use your home's equity to purchase rental properties and build passive income. Arizona Real Estate Boom: Find out why property values from 2015 to 2025 have soared, potentially boosting your equity.

In this episode of the Tactical Empire podcast, Jeff Smith and Shawn Rider delve into the third level of financial freedom: liquidity. The discussion covers various sources of liquidity, including savings, equities, home equity lines of credit, and unconventional assets. They emphasize the importance of understanding one's full financial picture and recognizing potential cash sources to support investments and financial growth. The episode also provides practical advice on how to strategically leverage assets and access capital, while highlighting the need for careful financial planning and consulting with accountants or financial advisors.Chapters:00:00 Introduction to Tactical Empire00:34 Meet Shawn Rider: The Pickleball Enthusiast01:11 The Pickleball Craze: A Discussion03:39 Introduction to Financial Freedom Levels03:57 Level 1 and Level 2 Recap04:41 Understanding Level 3: Liquidity05:11 Strategies for Accessing Cash07:53 Leveraging Assets for Financial Growth13:50 Personal Experiences and Advice21:14 Final Thoughts and AdviceYou can connect with Shawn Rider on Facebook and Instagram. If what you heard resonated with you, you can find Jeff on Instagram, Facebook. If you're interested you can visit The Tactical Empire's website https://www.thetacticalempire.com/home-4169. And don't forget to visit us on Apple Podcasts to leave a review and let us know what you think! Your feedback keeps us going. Thanks for helping us spread the word!

This episode is brought to you by Prosper Mortgage Group, LLC  #OwnYourFutureNMLS 2490880  Equal Housing LenderBrett PopishNMLS 253202Check out the comparison report that is referenced by clicking on the following link:Total Cost AnalysisFollow me on X & Instagram @bpop80#BeDEFIANT

In this podcast, we will explore the differences and similarities between Home Equity Line of Credit (HELOC) and Home Equity Loans. We will discuss how each works, what are the benefits and drawbacks of each option.We will delve into the definitions of HELOC and Home Equity Loans and how they work; discussing their similarities and differences, including the interest rates, timelines for repayment, and differences in payment structures.I will share tips on how to determine whether a HELOC or Home Equity Loans is better suited based on the our financial priorities and goals. For example, a HELOC may be a better option for individuals that prefer flexibility with their draw down schedule and interest rates. Alternatively, a Home Equity Loan would be a better fit if stable rates and fixed payments are preferred by the borrower.We will discuss the eligibility requirements for getting approved for HELOC or Home Equity Loans, which may include credit scores, income verification, and meeting equity requirements. We also dive into the potential risks and benefits associated with each option.By the end of the episode, you will have an in-depth understanding of the differences between a HELOC and Home Equity Loan, and a clearer idea of which one of these options would be the better choice for your unique financial situation. Ultimately, this podcast aims to provide valuable information to empower listeners to make informed decisions when it comes to their home equity finances.DISCLAIMER: I am not a financial adviser. This Podcast is for educational purposes only. Investing of any kind involves risk. Whileit is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your ownresearch. I am just sharing my opinion.This podcast is sponsored by Amirison Financial. Our goal is to help the culture build Wealth Assets Prosperity. We appreciate you taking the time to listen to this episode and share the content if you find value.

Do you own a home with a ton of equity?In this episode, I talk about the awesomeness of a Home Equity Line of Credit (HELOC).I cover the pros, cons, and how they compare to other options that may be available to you.

Housing prices in Canada are set to keep rising throughout 2022. The trend is not expected to slow down even with the prospect of higher interest rates. Homeowners with existing mortgages are the ones benefiting from the gap between low interest rates and high inflation. But what is the true cost of home ownership? Is it still a good investment? In today's podcast Licensed Insolvency Trustee, Matthew Fader, talks about mortgage and debt. He goes through the different refinancing options available and explains some of the terms used to describe them. He also covers:The basics of conventional mortgagesThe pros and cons of Home Equity Lines of Credit (HELOC)Your mortgage's paper equity Shopping for mortgage insuranceOptions for 2nd and 3rd mortgagesIf you are struggling with your mortgage payments, Licensed Insolvency Trustees can help you take control of your debt. They are considered some of the best financial advisors in the country and the only ones licensed by the federal government of Canada. About Matthew FaderMatthew has worked in the insolvency field since 2005 and joined Allan Marshall and Associates in 2017. His positive outlook helps reassure his clients with any financial insecurities they may have. Matt's goal is to ensure that everyone has the best possible experience and is treated with respect. Additional Resources Allan Marshall & Associates Licensed Insolvency TrusteePreparing for Higher Interest Rates When You Have Mortgage DebtIs a Home Equity Line of Credit (Heloc) A Good Way to Get Out of Debt?

Before Michael Lush started Replace Your Mortgage and subsequently Replace Your University, he had to learn how to overcome a lot of obstacles in learning how to best utilize a first lien home equity line of credit. He and his staff of mortgage experts, through the Replace Your University and Replace Your Mortgage program, help you quickly and efficiently navigate through and over those obstacles, so you can start paying your home off even quicker. Learn more by going to www.ReplaceYourUniversity.com

In this episode Michael Lush talks about how even Elon Musk, the richest man on earth, leverages debt to buy certain things. That's because he understands money and how to make it work for you. This same principal applies to Replace Your Mortgage and what we teach you about first lien home equity line of credit. You can learn more at www.replaceyouruniversity.com

In this episode learn how a Home Equity Line Of Credit - or HELOC - can unlock your home's full potential. We discuss the basics of what a HELOC is, the difference of that and a personal loan or our GOgreen Financing options (formerly known as the REEL program), and we laugh along the way about our "fun facts".

Very few people could have predicted the pandemic housing boom in Canada over the last year and a half. Homeowners have found that the equity in their homes has increased substantially. This has led many to wonder if they should utilize that equity to pay down their debts. But where do you start and what are the different options available to you?In this podcast Licensed Insolvency Trustee, Derek Chase talks about refinancing your home to avoid debt problems. The following topics are explored:Refinancing your home with your mortgage lenderTaking out a second mortgageHome Equity Line of Credit (HELOC)Risks involved in using the equity in your home Licensed Insolvency Trustees should be your first point of contact when you are looking for help with unmanageable debt. They are federally licensed and regulated which ensures you get unbiased advice.About Derek ChaseDerek Chase is a Licensed Insolvency Trustee in British Columbia. He has been helping individuals and corporations restructure their debt since 1997. His areas of practice include personal and corporate insolvency including Consumer Proposals and Bankruptcy. The best part of his work is to be able to witness lives change for the better when the heavy burden of unmanageable debt is lifted.  Additional Resources:Licensed Insolvency Trustee - Bankruptcy Trustee BC: Derek Chase & AssociatesBC Bankruptcy Exemptions When You File For BankruptcyMortgage Foreclosure Myths | Mortgage Payment & Interest Options To Consider

In this episode we revisit an old topic of leverage but put more focus on accountability and eliminating excuses. Look in the mirror...and realize you are the only one holding you back!

On this episode we discussed Creative Financing. The goal of creative financing is generally to purchase, or finance a property, your educational expenses or whatever the case may be using as little of his own money as possible, otherwise known as leveraging, OPM (Other People's Money). It can even be leveraged as a means to secure the funds for educational purposes as a pose to securing funds via traditional methods. This allows you to get better rates or even alleviate interest rates entirely. But it does come at a cost (outside of having a good credit score/history, solid income to debt ration, track record of payment history etc the preliminary requirements) you MUST be reliable, trustworthy, dependable, have developed personal rapport with the other party involved and have a track record of a high level of Integrity. In addition it comes down to honesty and consistency of character if you lack in any of this then it's not an option for you. This is an option that potentially could save you money. Essentially this episode is life hacks to get you thinking outside the box. KEY TAKEAWAYS: Conventional Methods: Personal Loans, Auto Loans (Car Notes), Mortgages, Student Loans etc. Creative Methods: Shared Secure Loan, Loans from family/friends and paying them back, leveraging an individual with a strong financial record to Co-Sign on your behalf, Cash-Out Refinance, Home Equity Line Of Credit etc. Follow us on Instagram and Twitter @loampod Steph: Instagram @misterbottles and Twitter @GEDSuccessStory Fonz: Instagram @fonz_onamission27 and Twitter @onamission_27 DISCLAIMER Fonz & Steph are NOT certified financial advisors, nor lawyers, nor economists, nor CPA's. We are two certified IT professionals that take ownership of the task of being financially competent for ourselves and our last name. The contents on this podcast are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice.

In this episode of the PoFU Podcast, Jeremiah presents yet another valuable case study brought to us by one of our loyal listeners.  We discuss the concept of house hacking where purchasing a multi-unit investment property and living in one of the units affords the opportunity to greatly reduce your housing costs, in some cases bringing your housing costs down to zero! This reduction in living expenses frees up cash to invest...or roll into another house hack, and another one, and another one...

In this episode we present our first case study: taking the surplus savings from a mortgage refinance and turning that into substantial cash flow and equity.  Based on a very fictitious friend, Fred Haise, this episode provides a conservative and realistic path to growing your net worth, creating passive cash flow, becoming your own banker, and using smart leverage ... all with zero impact to your expense budget.

On this episode of The Oh Hell No Podcast Keisha Nicole sat down with Bill Westrom a financial professional who is focused on helping people change their financial lives.  Bill shares how he got into this industry, what led him to create a new banking model for consumers,  how he is educating people on how to make their money work for them, and how home buyers can pay off their home in five to seven years.  To learn more about Bill's banking business model visit www. truthinequity.com Join my new community Spark Chasers and discover your spark https://spark-chasers.mn.co/share/vFiVzajqVx7LyN_f?utm_source=manualCheck out The Oh Hell No Podcast & get the information you need to live your best life!www.ohhellnopodcast.comFollow on Instagram  @theohhellnopodcast Tell us what you want to hear...fill out our questionnaire! https://forms.gle/pLHjHLtv1SkgHRpF9 

Welcome to the Multi-FAMILY zone podcast, where business meets family. The hosts of the show, Julia and Gino Barbaro, have been married for over twenty years, and have six children.  Julia homeschools the children, and recently became a marriage and life coach to help couples become better communicators and help enrich their lives.  The couple is constantly asked about how they balance their entrepreneurial and real estate journey while raising their kids. The Multi-FAMILY zone was created to address these questions, along with a host of questions from the Jake and Gino community. In this one year anniversary show, Julia and Gino are honored to bring you the story of Jake & Whitney Stenziano, a couple that have had a transformational life together and continue to grow their family life alongside their entrepreneurial spirit.  Jake & Whitney discuss the challenges they faced when they relocated to Knoxville from New York, the fear of Jake leaving his W2 job, and the growth in their communication. Whitney shares with us how she supported her husband, and where she got the courage to trust him with their financial future, from cashing in their bonds, to blowing up their 401ks (their little nest egg), to tapping their Home Equity Line Of Credit, and even approaching their grandparents for money.  Jake’s persistence, along with a clear plan and vision, gave Whitney the confidence to follow the plan. They now live an amazing life, with two beautiful children, and have positively influenced hundreds of people, while growing their relationship and becoming much better communicators.   Questions or comments? Email us at juliabarbaro@gmail.com

You can postpone mortgage payments with forbearance.  If you collect rent payments from your tenants, can you pocket it all and not pay your mortgage? What a windfall! (Complete episode transcript is below. Read along as you listen.) In crisis times, your cash flow is your cushion. Last year, the publication “Emerging Trends In Real Estate” forecast that the chances of a pandemic roiling the economy were low. The CARES Act’s effect is discussed. Payments follow five links in a chain: employer - renter - investor - mortgage servicer - mortgage-backed security holder. What’s the difference between a lender and a mortgage servicer? Ethics and greed. Are there deleterious consequences of forbearance? Resources mentioned: Read episode transcript at: www.GetRichEducation.com/290 CFPB Video on CARES Act: https://www.consumerfinance.gov/coronavirus/ cares-act-mortgage-forbearance-what-you-need-know/ Mortgage Loans: RidgeLendingGroup.com QRPs: text “QRP” in ALL CAPS to 72000 or: TotalControlFinancial.com By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Construction Turnkey Property: NewConstructionTurnkey.com Best Financial Education: GetRichEducation.com Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Welcome to Get Rich Education. I’m your host, Keith Weinhold. You can potentially collect your rent income from tenants and then, turn around and NOT pay the mortgage loans on those properties for a few months, pocketing a nice profit. But should you?    In the pandemic-induced world of eviction moratoriums and mortgage loan forbearance, there will be winners and losers. I’m helping you sort that out so that you can be one of the winners - and more - today on Get Rich Education. ____________________   Welcome to GRE. From Olympia, Greece to Olympia, Washington and across 188 nations worldwide. I’m Keith Weinhold, this is Get Rich Education, and we are all living in strange times.    The squeeze for some of us, I think is encapsulated in Jerry Constantino of Queens, New York’s situation.   He’s talking with owners of the roughly 500 units that he manages, who are worried what’s going to happen if the rent checks stop coming in.    As part of his Property Management duties, Jerry is talking with tenants, many of whom he assumes will be delinquent this month because they either lost their jobs or they’re just choosing not to pay.    Jerry’s a hard-working guy and he knows that the tenant in Unit 31-A has paid his yet, and it’s a few days past due.    But yet Jerry knows that this tenant hasn’t lost his job and ought to be able to pay rent on time like he always did before the pandemic.   Jerry sees this tenant from Unit 31-A in the hallway and says, “Don’t mess with me dude, where is the rent?”   And by the way, Jerry got a little gruff and his words weren’t exactly “Don’t MESS with me…” but that’s the version that you get here on this unapologetically squeaky-clean lyrics show.   And besides MANAGING property for others, Jerry is also in discussions with banks, trying to figure out how he’ll make mortgage payments because he’s got properties that HE owns HIMSELF during this worsening global health crisis.   And, a lot of people find themselves in a situation similar to what Jerry is in. Some large property owners have already rolled out payment plans for their tenants - and halted evictions - because they legally have to - as the coronavirus outbreak roils the economy.  Many apartments in the U.S. are essentially small businesses that tend to have less financial flexibility and will need some help ... in the coming months. Now, there are some choices for the millions of Americans who lost their jobs and have no clear prospects for when they’ll get them back.  Three things that are aiding TENANTS right now, helping them pay the rent are: eviction moratoriums, unemployment benefits and cash payments - like those $1,200 stimulus checks - from the federal government that can help many keep a roof over their heads. Nearly half of the nation’s 44 million renter households were already stretched financially: before the pandemic. The University of Chicago found that ONE-THIRD of adults can’t cover necessities after missing just … one ... single paycheck.    One in four tenant families pay over half of their income just to make the rent payment.   We’re basically going to break down Jerry Constantino - the King Of Queens’ - situation here, being mindful that ....   In general, the average Get Rich Education listener is better off than the average real estate investor for a number of reasons.   For starters, one of our core principles here is that we invest predominantly in residential real estate. That is due to its durable utility.   Coronavirus has changed a lot in society, but it has NOT changed the fact that people still need a place to live.   You’ve got to be grateful that we focus on residential because it’s recession resilient.   Most landlords are still getting 80 to 90% of the rent income, even 100% if you’ve got a small portfolio.    Just think about how many businesses aren’t getting nearly 80-90% of their income now? The restaurants, and bars and gyms, airlines, cruise ships, hotels, on & on … are they even getting 30%?   Though it’s the exception, some businesses, like large retailers might be getting 105% of their usual income now.    We also focus on investor-advantaged markets here at Get Rich Education - with the principle that the market is more important than the property.    And so many people get that backwards.   We discuss the advantages of being invested in multiple markets so that your tenant income streams are from diverse employers. Anyone that doesn’t adhere to that is in more trouble.   Also, we focus on buying property that cash flows on the day that you buy it - where the monthly income exceeds the monthly expenses on your settlement day - on the day that you buy - not “maybe it’ll cash flow sometime in the future”.   Look, in times of crisis, your cash flow ... is your cushion.   Here’s what I mean. To keep it simple, if every one of your properties rents for $1,000 and has $800 in monthly expenses, you’ve got a $200 monthly cash flow on each one.   You’d have to lose - just outright lose - and never recover wholly 20% of your income and then you’d still break even on a monthly basis.   This is what I mean that in crisis time, your cash flow becomes your cushion.   If you have a 10% rent loss, your cushion is half-eaten, and your cash flow becomes $100 per door. You can’t kick tenants out for a while because there’s an eviction moratorium.   But, you can also be granted loan forbearance and not have to pay your mortgage. So you might be able to profit wildly at this time.    Each of these things - an eviction moratorium and mortgage loan forbearance are part of the recently-passed CARES Act. I’ve got way more on that later … whether you’re in Jerry’s situation or you’re better off.   Let’s pull back and look at how unlikely this Black Swan Event known as the coronavirus pandemic really is, first.    Here’s some perspective. Last year, the publication called “Emerging Trends In Real Estate” launched a survey that’s just so, so interesting now that we have the benefit of hindsight.   They launched a survey last year called “The Importance of ISSUES for real estate in 2020”. They were FORECASTING the following year - this year.   A pandemic was NOT forecast to be an important issue at all for real estate this year.     In fact, the #1 survey answer was predicted to be the political landscape. That could make sense as this is an election year, and divisive partisanship sure is not abating.   The #2 predicted factor was … government & budget issues.   The issue forecast to be the 3rd-most important real estate issue for this year was .... immigration. OK, makes sense. That was a hot topic for a while. And greater immigration creates more housing demand, sure.   #4 was Global conflict. OK, makes some sense. We had growing trade tensions with China, political tensions with Iran and North Korea.   The real estate issue predicted … last year … to be the fifth most important for this year was … Income inequality.   How long do you think that it will take us to get to a pandemic … or epidemic. No one foresaw this.   Sixth was Rising education costs. That definitely intersects with housing as giant student loan debts increasingly prevent people from forming a first-time homebuyer downpayment, which keeps them in the renter pool.   The seventh most-important real estate issue for this year was predicted to be Social inequality.   Eighth was terrorism. That’s going lower on the list as major terrorist acts in America continue to recede into memory, gratefully.   And number nine - yes, last year, what was predicted in “The Emerging Trends In Real Estate” survey for THIS year is … Epidemics.   All those other factors were deemed to be more important.    And that’s from a pretty respected publication. That source, Emerging Trends in real estate, is partly compiled by the Urban Land Institute.   So, it just goes to show you that, no one, not me, not you, not the expert economists that come here on the show with us - no one really knows.   Now, there was one Get Rich Education episode where I had a “glass half-empty” segment, maybe one year ago, where I was talking about all the things that could go WRONG in real estate investing.   I did mention a plague. I used the word “plague”. And what I was thinking about was, what if an awful bubonic-like plague wiped out, say 20 million Americans - which would be more than 5% of our population.   Well, that sad event would reduce housing demand, of course, if there are substantially fewer … live humans.    And as sad as COVID-19 is, no one is predicting that it will be fatal to even one-half of one-percent of our population.   And I certainly wouldn’t have predicted that by this year we’d be practicing things like sheltering-at-home or social-distancing. It still all seems like some sort of bad dream.    We’re talking about, “Do you get free money? Should you take mortgage loan forbearance?” here on Get Rich Education Episode 290.   In fact, if you’d like to read along while you're listening, the entire written transcript for today’s episode is in the Show Notes. You can access those at GetRichEducation.com/290 and follow along that way if you like.   In order for you to understand mortgage loan forbearance - and forbearance means that you can postpone making payments, understand the big picture.   You can best understand this as part of the five links of a chain.    Yes, forbearance allows you to BREAK a chain.   The five links in the chain follow the money. They follow the payments through: Payment goes from Employer … to Renter... to Property Owner... to Loan Servicer... to finally, the MBS Investor. They are the five links.   Now, let's look at what happens here.   The first and second chain links involve that payment from Employer (first link) and the Renter (the second link).    Economically … how bad is it? We don’t yet really know how high the unemployment rate will get, though we expect it to be substantially higher than that of the Great Recession of 2008, when it was 10%.    Chain Link 2 to 3 is the Renter’s payment to the Property Owner. This is a link that you’re clearly quite concerned with. This is your rental income. This is the income that Jerry from Queens is trying to scrape together.    We don’t yet know what the eventual rent payment DEFAULT RATE will be, of course that’s going to vary among geography and asset type and many other things.    But be aware that at this point, about 75% of Americans have lost at least 25% of their income. About ¾ of Americans have lost ¼ or more of their income.   As you know, during coronavirus, most areas have an eviction moratorium. Meaning that if the tenant can’t pay the rent, you can’t kick them out for a while.   Now, what if you - the income property owner - Link 3 - don’t have enough rent income to pay the mortgage to Link 4, which is your bank or your loan servicer?   If this is your situation, you want to call the company that you pay the mortgages to. You pay your mortgages a mortgage servicer.   Now, what is a “mortgage servicing company”, anyway?    A mortgage servicer is the company that handles the day-to-day administrative tasks of your loan.    They send you your monthly statement, they receive your payment, and they manage your escrow accounts.    This is different from your mortgage lender. Your lender is the financial institution that gave you the property loan in the first place - back on your closing day.   So that is the difference between a mortgage LENDER - and the servicer whom you’re dealing with now.   Now, a mortgage servicer could either be a bank or a non-bank.   A bank “mortgage servicer” would be names that you’ve heard of like Chase or Wells Fargo.   A non-bank “mortgage servicer” could be a name like Suntrust Mortgage or AmeriHome. They’re names that you’re less likely to have heard of.    So, to review, money flows from your tenant’s employer, to your tenant, to you (the investor), to the fourth chain link, which is this mortgage servicer.   Now, if your mortgage is backed by the government (those would Fannie Mae, Freddie Mac, VA, FHA, or USDA -  and it often is) - if you tell your mortgage servicer you're having financial trouble because of the pandemic, your mortgage servicer has to let you stop paying your mortgage for up to 180 days - that’s six months - with the possibility of another six month extension after that - and you will not have to pay late fees, and there will not be any foreclosure on your property, and there will not be a ding on your credit score either.   It gets even better than that. Because at last check, there isn’t any additional interest beyond your scheduled amounts accruing on your missed payments while you’re in forbearance either.   Now, you WON’T magically see a portion of your principal balance disappear though.   This all pertains to both primary residences and your rental properties for government-backed loans.   If your loan isn’t government-backed, you still might receive some similar-type of relief.   This is what is being granted to you during these exceptional times. And the mortgage servicer isn’t going to ask you for a bunch of paperwork or documentation of your hardship either.   But they might just ask you some questions over the phone - details about your income, expenses and other assets, like cash in the bank.   They’re just granting you the forbearance - letting you postpone your mortgage payments.    Now, that must sound great. And it is a good start.    Look, if you CANNOT make your payment due to economic hardship, then you should ask for the forbearance.    And don’t just stop making payments if you CAN’T make payments. Alright, you can’t do that. You DO have to ask for forbearance. But it will be granted.   Now, what if you CAN make your mortgage payments and you call up your loan servicer and ask for forbearance.    In this case, say that your total monthly rent income is $10,000 but you only got paid $9,000 of rent this month due to pandemic layoffs.   And your total mortgage payments are only ... $8,000.    Well, you could make the payment but you don’t have to.   So … could you pocket your $9,000 of rent  this month and skip out on paying your mortgages completely & then have a $9,000 cash flow month instead of your normal $2,000 cash flow month?   Yes, you probably could! And this could totally feel like a windfall to you!   But … that would be dishonest - and it could come with consequences.     I’ve talked to two mortgage lenders this last week to find out what’s REALLY going on out there.    I learned about one case where, a borrower asked for forbearance, they were granted it, it didn’t ding that borrower’s credit SCORE.    However, on their credit REPORT, it is marked “Forbearance” on that report.    Hmmm … you wonder if this will impact that borrower’s creditworthiness in the future.   Here’s the other potential negative consequence if you are granted forbearance.    Again, forbearance means the ability to postpone payments.   What’s going to happen in the future? Well, no one really knows with any of this. This is uncharted territory and I can’t underscore that enough as we deal with the economic fallout of the pandemic. The situation changes quickly here.   When are you going to have to MAKE UP those payments? If you get six months of forbearance, would you owe six months of payments all at once - only six months from now?   If so, that probably won’t help you out. Because if your tenant - God forbid - missed six months of rent payments, they’re not going to make one lump sum rent payment for six months worth of rent.   However, for you, if you get forbearance, it appears more likely that your payments - will just get tacked on to the end of your loan - without any interest on top of what’s scheduled.   Now, that outcome would be … pretty awesome.   Alright, so we’ve established that you can take a pause from paying your mortgage loan servicers.   But here’s the crazy thing. The fifth and final link in the chain is the Mortgage-backed security holder. They get their money from the mortgage servicer.    Well, where is the servicer supposed to get the money if people like you - the property owner - declare forbearance.   No one knows that answer. That hasn’t been worked out yet.    Right now, the total share of loans in forbearance is 6%.    But, that number is going to go higher so the mortgage servicing industry has been crying out for help - your SunTrusts and AmeriHomes of the world.   Last week, a plan had come together such that mortgage loan servicers would only have to forward four months of missed payments to MBS investors.    But a lot of servicers don’t have that kind of money lying around.    Now, Wells Fargo, obviously, is a big bank and they do some servicing as well.  There's still lots of big banks servicing mortgages. And the big banks are actually in pretty good shape right now. They have enough money that they can deal with this situation for a while. They're stronger now than they were in the 2008 financial crisis. And since the financial crisis, nonbanks have been taking a bigger and bigger share of the mortgage servicing business.  And these nonbanks - like SunTrust and AmeriHome - have much less money on hand than banks do, and they're not allowed to borrow from the Fed like a bank.  And even in the good times of the past few years, there were all these reports coming out saying, you know, if the economy were to ever turn down and people stopped paying their mortgages, these nonbank servicers are going to be in trouble. This is what needs to be fixed right now - this connection between chain links 4 and 5 - from servicer to MBS Investor. The aid for servicers will probably be there.  The government is typically there to save most anything to do with homeownership. Well, those are the five links in the follow-the-money chain - from employer to tenant to you, the investor, - to the mortgage loan servicer - and finally, to mortgage-backed security holder.  There’s more that I can explain there, but I won’t, because it could be speculation - so we’ll see what happens next there. Let’s get back to you. I said that I suggested mortgage loan forbearance if you need it. Should you get a mortgage forbearance if you don’t need it?  No. If you don’t need it, don’t take it.  Now, why would I say that? Well, there could be some upsides to taking it.  But it puts you at some risk, like I mentioned and there is more that is absolutely vital for you to consider. I’m going to talk about that in a few minutes.  We’re talking about following the money along five chain links, and mortgage loan forbearance here on Get Rich Education, Episode 290 … as the world gradually has more & more bad haircuts as the coronavirus pandemic inches on … and you’re wondering if you’ll have “actual weekend plans” in your life ever again.    Coming up in the next few weeks here on the show, we’ve got a lot of great material. New York Times bestselling author John Assaraf will be here with me on Get Rich Education as we take a deep dive into abundance mindset during tough times … … and a lot of other integral shows here as I focus on providing you with actionable guidance that you can use on economics and real estate amidst the pandemic. I primarily reach you in two ways. There’s our audio show here, which as you know is released every Monday. You’ve probably been listening for years.  The other way is through The DQYDD Letter, which is e-mailed out about weekly. And lately the valuable letter is being sent to you on either a Wednesday or Thursday. There is so much fast-changing news amidst the pandemic that the “Don’t Quit Your Daydream” Letter really supplements this show here well.  That’s why it’s never been more important for you to subscribe. The letter is free, and all you’ve got to do is sign-up now at GetRichEducation.com I’m coming back with more. I’m Keith Weinhold. THIS is Get Rich Education. (RESOURCE PROVIDER SLOTS) Hey, you’re back inside the show that’s created more financial freedom for busy people just like you than nearly any show in the world.  This is Get Rich Education. I’m your host, Keith Weinhold. Should you get a mortgage loan forbearance if you don’t need it?  No. If you don’t need it, don’t take it. That is my opinion. Now, why would I say that? Well, there could be some upsides from you taking it if you don’t need it.  But it’s not quite like it’s free money. It puts you at some risks, like I mentioned and … some of this comes down to a question of ethics & greed. Now, I don’t know what Jerry, the property manager & investor from Queens, New York that I talked about at the top of the show -  is going to do with his situation. Me, I have … gosh … it guess it’s not quite one hundred thousand dollars worth of mortgage payments that I make monthly … … but it’s well into the tens of thousands every month. I still have a good monthly rent collection. But I have some tenants that can’t pay due to losing their job from coronavirus. But … I CAN make all of my mortgage payments, so I don’t have any plans to get forbearance now or anytime in the foreseeable future.  If I have agreed to pay someone, and I can afford to pay someone, then I pay THAT someone. That’s just treating other people well. What is greed, anyway? Wanting more money is not greed. You want financial betterment just like I do and most anyone does.  But padding your own cash reserves by pocketing your tenants’ rent and then not paying your mortgage loan servicer - that’s greed. Because I’d be profiting from hurting others. If I don’t make a payment, there are people counting on that payment - in either that fourth or fifth chain link - that servicer or that mortgage-backed security investor.  Do you know what’s really happened recently? I know about an investor that closed a mortgage loan (and mortgage loans are still closing here in the pandemic, of course, but under tighter lending guidelines) - but this investor closed, then declared forbearance almost immediately - as soon as he practically could. So he missed his very first payment, and then the bank put him in a status of what’s called “first payment default”.  Well, then the lender can’t sell that loan to a servicer & and then that bank has got to keep that losing loan on THEIR books. Also, that “first payment default” status is tied to that borrower … and will that come back to bite them? I don’t actually know, but it’s probably not going to help them. Could that borrower have made payments if they were able to qualify for the loan at the closing table just a few weeks ago? Yeah, probably.  If that impacts that borrower’s creditworthiness down the road, it’s pretty hard to feel sympathy for them. It’s times of adversity like this when one’s ethics show through. Cheating the system tarnishes your character and it screws up the system for the honest people … where the taxpayer might have to end up paying for it. So, either I can be part of the problem or part of the solution. I know what side I’d rather be on … and you can decide for yourself. You can call it what you want, “karma”, or whether you’re religious or not, from Christianity, “The Golden Rule” is “treat people how you would want to be treated.”  It’s a maxim in other religions too. But it’s really just being a decent human being. We don’t want to take advantage of a crisis by disadvantaging others. That’s what looters do. Fortunately, we have an audience here that does want to do the right thing. Like I say, do the right thing before you do things right. To summarize part of what you’ve learned today. There are five chain links in the follow-the-money path that the pandemic is pressuring - they are employer … to renter ... to property owner … to loan servicer ... to finally the MBS Investor.    Loan forbearance means that you have the ability to postpone your mortgage payments - and that’s on both your primary residence and your rentals.   Forbearance is being easily granted on most loan types - with some clear guidelines for gov’t-backed loans. But you must ask. If you need it, please DO ask. If you don’t need it, please DON’T ask.   As a reminder, news changes fast and one mortgage loan servicer might outline different terms for you than another servicer does. In fact, there is so much fast-changing news amidst the pandemic and strange economic aberrations like oil prices going negative last week. There’s such a glut of oil supply, that oil is being treated like junk.  Just like you would have to pay another person to take your junk, oil producers are having to pay people to take their oil.  About ten days ago, Chase stopped accepting new Home Equity Line Of Credit applications. Customers with existing HELOCs will be able to continue to draw funds on those lines of credit, but the bank is not accepting applications for new HELOCs. Of course, the stock market has been more volatile than usual. Housing is way more stable, but it’s still too early to look at pandemic effects on housing PRICES.  Early indications show that there is even less housing SUPPLY on a market that was already undersupplied, so that’s substantial.   There is so much changing more quickly now, that the “Don’t Quit Your Daydream” Letter really supplements this audio show here. I don’t think it’s ever been more important for you to subscribe. For example, in some good news, a recent letter informed you that any 1031 Exchange that you do with a deadline between April 1st and July 15th of this year is now moved to July 15th, and other things like that.  Get the “Don’t Quit Your Daydream Letter" free, at GetRichEducation.com I’m Keith Weinhold and I’ll be back next week to help you build your wealth. Don’t Quit Your Daydream!

Here are three options you can choose from RIGHT NOW to increase your liquidity, and your cash on hand using your home. Do a cash-out refinance. Yes, a cash-out refinance might have a higher interest rate; but when used as a financial strategy, that does not matter. What if you could pay off all other debts and/or add cash to your savings account right now. Equity in your home is illiquid, locked up and not serving you. If we could instead convert equity to cash to pay off debts, we could save hundreds, if not thousands, of dollars a month. If rates continue to be low, and I feel strongly they will, we can then do a refinance in six months to lower your payment and secure your financial future. Get a HELOC. A HELOC is a Home Equity Line Of Credit. This is a second loan that sits on top of your current first mortgage. It is typically a variable interest rate and acts like a line of credit you can draw from. You can get a HELOC on a primary home, second home or investment. There are several second lenders who are no longer originating. Don't worry! There are others who are, and I have the list. Feel free to reach out, I can provide the best referral options. Request a Mortgage Forbearance. This needs to be requested through your Servicer.. the company you write your checks to each month. Forbearance allows you, the borrower, to apply for a pause in mortgage payments without the risk of negative credit reporting and foreclosure proceedings. The length of time available will be determined by the duration of this crisis. ----more---- Please know we are here to serve you in any way we can, including pointing you to the appropriate resources. Wishing you and your family good health and stability. Nicole Rueth, SVP The Rueth Team 750 W Hampden Avenue, Suite 500 Englewood, CO 80110 303-214-6393 www.TheRuethTeam.com Connect on social media: Follow me on FB: https://www.facebook.com/theruethteam/ Twitter: https://twitter.com/nicolerueth Linkedin: https://www.linkedin.com/company/the-rueth-team-fairway-independent-mortgage/ YouTube Channel: https://www.youtube.com/channel/UCPMdb94tUNMMsUTgdWRMDKw Nicole Rueth (NMLS 239840) is licensed to practice on behalf of OneTrust Home Loans (NMLS 46375) in the states listed below. For full compliance verbiage, visit theruethteam.com/compliance/. AZ, CA, CO, FL, ID, IL, IN, KS, MI, MN, MS, MO, MT, NE, NM, NC, OK, OR, TN, TX, UT, VA, WA, WI, WY.  

Do you want to purchase commercial property but don't have money for the down-payment? Discover how to use your HELOC power to purchase commercial real estate! In this podcast you will learn how to:1. Use your home's equity to buy commercial real estate.2. Make sure the deal makes sense. 3. Know when it is a bad idea to use your home equity.

Easily confused with a second mortgage or home loan, a Home Equity Line Of Credit provides homeowners an opportunity to tap into their home’s value for cash – with the flexibility to draw on it as needed instead of taking a lump sum. It’s almost like having an open checkbook for home renovations, emergencies or other personal need – but paying interest only on what you use (often for rates lower than a credit card). On this episode of Money Talks, we discuss the pros, cons, and versatility of HELOCs, and why they’re an important tool to discuss with your financial advisor.

Should I get a HELOC when I close on my home? In this episode TJ talks about Home Equity Line Of Credit.It may not work for your situation, but it may be an option to consider in the right situation.Learn more at www.knowbeforeyoubuyrealestate.com

Today we discuss scammers, liars, cheats and frauds! Don also talks stocks, bonds, annuities, and crypto, while covering the news. Don answers questions on using Social Security in place of bonds, and which name to put on your stock investments. In this episode we also cover the topic of home equity lines of credit (HELOC) and whether or not to use them to pay of a mortgage. We round out the show with some useful reminders about the profusion of lies in the financial field. Stop worrying about the stock market, you don’t know the future! Can you use Social Security to replace the bonds in your portfolio? Which name to hold your stocks in and why. Some adjustments that have been made to Vanguard’s pricing structure. Mortgages, real estate and evaluating HELOCs. Phone scammers and how to identify them. Corruption and investigations in the financial industry. Talking Real Money Twitter — https://twitter.com/talkrealmoney Financial Fysics on Amazon – https://www.amazon.com/Financial-Fysics-Money-Investing-Really/dp/1453898557 Vestory — https://vestory.com/ Real Investing Journal — https://www.realinvestingjournal.com/ Vanguard — https://about.vanguard.com/ New York Times — https://www.nytimes.com/ Retiremeet — http://www.talkingrealmoney.com/new-events/retiremeet2018-jspm7

#198: The five ways real estate pays you, your monthly cash flow and using HELOCs are three listener questions that I answer today. Home inventory is so low that machine learning and artificial intelligence are being used to predict when someone is likely to sell. ATTOM Data’s Daren Blomquist tells us where today’s housing values are compared to pre-recession peaks. Want more wealth? 1) Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2) Actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 00:57 How would $1,500 monthly cash flow help me? 04:00 The “5 Ways” real estate pays you. 06:40 HELOCs. 26:16 Daren Blomquist interview begins. 29:00 Machine learning, artificial intelligence in real estate. 35:00 Higher mortgage interest rates = higher home prices. 38:18 National median housing prices vs. “pre-crash” highs. 40:30 Housing values in “stable” markets. 43:38 Get Rich Education TV. Resources Mentioned: www.attomdata.com Get Rich Education TV: GetRichEducation.tv Mortgage Loans: RidgeLendingGroup.com Cash Flow Banking: ProducersWealth.com Apartment Investor Mastery: BradSumrok.com Turnkey RE: NoradaRealEstate.com Find Properties: GREturnkey.com GRE Book: GetRichEducation.com/Book Education: GetRichEducation.com   Hey, welcome in to Get Rich Education, Episode 198. I’m your host Keith Weinhold and I’m going to answer a few listener questions today… ...about your cash flow, your total rate of return, and finally, Home Equity Lines Of Credit. Then we’re going to have one of the top real estate trend trackers in the nation join us here later. Let’s get right into it. Ellis from Gastonia, North Carolina asks, “Keith, Episode 188 had a great breakdown of how run you all of the numbers on an income property. The thing I’m wondering about is that your example only resulted in a positive cash flow of $150 on that property. With the maximum of 10 conforming loans that we can get, that’s only $1,500 in monthly cash flow. How would that be enough for us to leave our job?” Thanks, Ellis. And, of course, not everyone that listens here wants to have their passive real estate income replace their passive job income. Though many do. ...and it’s not a get rich quick thing...it’s about incrementally building up durable cash flow streams over years. Well, Ellis, and I’m not sure how many shows you’ve listened to. That example of the $150 cash flow was just for one SFH - and really for one of the lower-cost ones - the purchase price on that was 70-some thousand dollars. It was in Memphis. So most of the income properties you buy will have a higher purchase price, higher figures, and often a higher cash flow. Really, $1,500 with ten properties would be about as low as a projected number could possibly get. So Ellis, if you’re married, both you and your spouse - you each qualify for 10 one-to-four unit properties...20 total and BTW… ...you want to put those in your individual names. If both you and your wife were on the loan, that would count as a strike against each of your limit of 10, so as you buy, alternate back-and-forth - you own the first one, she owns the second, you own the third, and so on, or something like that. So that’s 20 doors minimum there - or I guess 19 since your primary residence is part of that formula, plus if you have some duplexes or four-plexes in there, that might be 25 or 30 or 40 doors. So, there’s so many reasons why you would likely have substantially more than $1,500 in passive monthly cash flow. Then there are financing programs beyond conventional ones, you might also have some 5+ unit apartment buildings, some agricultural parcels or a mobile home community, or maybe you even got a couple low-cost properties paid-off and don’t think it’s worth getting a loan for tiny amounts, so they produce cash flow although there’s no loan there… ...there are a ton of reasons why it would be way more than $1,500. Thank you for the question, Ellis.  ...And another important thing to remember there is that we’re only talking about cash flow - which is only one of five simultaneous profit centers that you typically have. But cash flow is a key profit center because it’s the most liquid one. Jessy from Sacramento, CA says, I love your show. It’s flipped my financial mindset totally upside-down, changed my family’s life, and changed what I thought was possible for us.  Part of what I love hearing about is that 5 Ways You’re Paid in real estate. Ah - then he (or she?) shows me an example here in the question of 30% for leveraged appreciation + 6% cash flow , 5% loan paydown, 4% tax benefits, 3% inflation-hedging = a total return of 48%.   Yes, those are the five ways that real estate investors often have as profit centers.   The question Jessy asks about this is: “Though I get my properties from GREturnkey.com and these returns seem about right, I don’t think I’m invested in any one market that performs this way.”   OK, I love that question, Jessy. Few individual markets are going to perform just that way.   It’s a blended portfolio approach. For example, on your new purchase in Dallas-Fort Worth, you might not have any cash flow any more. It might be cash flow zero. That’s just the way DFW behaves now.   But it’s likely that you’ve been achieving better than 6% appreciation there in DFW (and I’m referencing that 6% appreciation at 5:1 leverage as the 30% Jessy gave in the example).   Then if you’ve also bought in Memphis, you’re likely achieving less-than-average appreciation - that’s just how many areas in Memphis behave, but you’re getting above-average cash flow.   So it’s the blended portfolio approach that can lead to “Year One” returns like what I’ve described with the “Five Ways That You’re Paid”. Multiple markets means you’re more diversified at the same time.   One market, however, that’s performed lately with a nearly equal measure of both appreciation and cash flow are some of the Orlando and Tampa Bay submarkets...so some markets will come close - most won’t - they’ll be weighted differently across your five profit centers.   Thanks for the question, Jessy.   The next question comes from Michael in Astoria, Oregon. Astoria is beautiful. One day, I went to the top of the Astoria column there - it’s a tower overlooking the mouth of the Columbia River.   Michael says, “There aren’t any cash flow markets out here on the west coast and we have substantial equity in our $1 million Astoria home.   We still owe $504,000 on the loan so it’s about half-paid off.   From listening to you and understanding that the Return From Home Equity is always zero, I also know that our leverage ratio has been cut to 2-to-1.   What’s the best way of removing our home equity to use for down payments on cash-flowing income property?”     Well, thanks for the question, Michael. First of all, you need to decide for yourself that that’s what you want to do with your home equity.   Understand that doing so means that none of your equity is lost - it is merely transferred into multiple properties - and it also can produce a cash flow for you now.   Of course, though the return from home equity is always zero, borrowing against your home equity incurs an interest rate expense that you need to beat.   I’ve removed equity from my property with a HELOC for buying more investment property...and let’s drill down and unpackage a HELOC here - H.e.l.o.c. - Home Equity Line Of Credit.   Let’s talk about why you would use one, how it works, and both your advantages and your risks here, Michael.   With a HELOC - if you understand how a CC works, you largely understand how a HELOC works, except your credit limit is based on how much equity you have in your home. You can usually borrow up to an 80% combined LTV ratio.   So what’s 80% combined LTV really mean?   Now with your home, let’s just round your million-dollar home’s mortgage loan balance to 500K. This means that you could potentially borrow up to $800K total - you’ve already got a $500K lien on the property, meaning you could get a HELOC for another $300K.   Yes, with $300K, you could potentially put $30K into ten low-cost income properties in the Midwest and South - down payment & closing costs. Now you’ve spread your risk around because you’re invested in multiple RE markets.   Now to qualify for a HELOC, you'll need to document your income and employment status just like you would if you were refinancing your home, Michael.   People often use HELOCs for home repairs, sometimes they’re used to pay down higher interest rate CCs. But you can use the funds for anything - a trip to France, a new fishing boat.   The HELOC is essentially a second mortgage for you.   Like a credit card, homeowners can borrow or draw money on multiple occasions, usually for a period of 5-10 years, and up to a maximum amount - it would be $300K for you in this case, Michael.   There are two time phases with a HELOC. The first one is your Draw Period, which typically lasts 5-10 years. The second one is your Repayment Period - which can last about 10 years, maybe even up to 20 years.   Now the first one, your HELOC Draw Period is a really nice time. Now you’ve got access to $300K, and you only need to make interest-only payments on it - which means you have flexibility - you can make principal payments on it if you want, but you only need to pay the interest portion monthly.   And your HELOC balance can be very elastic - like a credit card - you could just borrow out $150K on your $300K line right away, make extra principal payments to get it down to $120K after a few months, then months later, run it all the way up to the limit of $300K, and years later pay it back down to “0” again.   It’s a pretty great time for you - you’re enjoying what feels like a windfall of cash and you only need to make the interest-only payments.   But after this 5-10 year Draw period, the second of your two HELOC time phases begins - your Repayment Period.   Now, this can be a real test of how responsible you’ve been with your HELOC funds during your Draw Period - because during this repayment period which can last 10 to 20 years, you must pay both the interest and the principal amount - so your required minimum payment will be higher over all these months until you pay the HELOC balance back down to zero.   Usually, the repayment amount is calculated by dividing the capital you’ve accessed - call it $300K here - by the number of months in your repayment period. Simple math here.   Now, before you originate your HELOC - beware - occasionally, a lender requires your capital to be fully repaid at the end of your 5-10 Drawdown period all in one lump sum - which is known as a balloon payment.   So before you take out a HELOC, just ask your mortgage loan officer about the duration of your Repayment Period once your Draw period ends, ensuring that there’s no balloon due.   Now, even if you do have a 10-20 year repayment period, some borrowers still get surprised at the higher payment during the repayment period - but you won’t be - you’ve got to pay both principal and interest there. Your required payment will increase then.   Now, here’s a great option for you. Of course once your 5-10 year Draw Period ends, maybe you want to keep your line of credit and extend the draw period. Many lenders will do this for you, so long as your home still has enough equity and your financial health hasn’t tanked. Typically, a lender will “pay off” your old line of credit by simply extending you a new one. Now that you understand Draw Periods and Repayment Periods, let’s talk about your HELOC’s interest rate.   HELOCs have substantially lower interest rates than CCs. HELOC interest is often tax deductible - CCs are not.   Your interest rate floats. It’s not fixed. HELOC interest rates are tied to Prime Rate or LIBOR plus a margin above that which is based on your credit score.   Your upfront HELOC costs low, Michael. A $300K HELOC cost might only be a $1K upfront cost.   Now, let’s talk about some risks associated with using your primary residence’s equity for purchasing rental property.   If you have a habit of abusing credit, maybe avoid a HELOC altogether.   Since a HELOC is secured by your home equity, if you don't repay it, you could end up in foreclosure. The same of which can be said for most any mortgage.   Let me tell you about something bad and unforeseen that happened to me with a HELOC in about 2007 or 2008….and by the way, lending guidelines were so loose then that I actually had a 90% LTV HELOC on a non owner-occupied four-plex.   If you can believe that!   But it’s not like that today, so with your HELOC based on 80% LTV on your primary residence, say, Michael, that you’re in a place during your draw period a couple years down the road and say you’ve borrowed $150K of your $300K HELOC.   You’ve got half of it in use.   Here’s what happened to me, just using your numbers to stick with your example - I got a notice from the bank telling me, essentially that they froze my HELOC.   What did freezing my HELOC mean? It meant that even though I was still in my Draw Period, they wouldn’t let me draw further equity from my home - it was frozen at $150K.   Now, they didn’t call the note due or demand any principal payments.   I could still make interest-only payments on the $150K, but with no further drawdowns. There was another $150K that remained unutilized.   ...and why was that? Well, a lot of unprecedented things happened during the Great Recession of 2007 to 2009.   Even though the property I owned didn’t fall in value all that much ten years ago, when housing values started turning down nationally 10-12 years ago, many banks said that you can’t make any further draws on your HELOC - we’re freezing it - essentially the banks were saying that we’re worried about the value of your collateral that secures this loan that we made to you.   Well, I was disappointed because I still had some open funds to use on my HELOC, but access was shut off for quite a while. That was the HELOC freeze.   Now, I could have avoided that had I just taken all the money out of the HELOC and put it in my own liquid bank account. Of course, I would have had to pay interest on a lump that I wasn’t investing too.   Let me just add here, that whomever you listen to for finance and real estate investing information and education, listen to someone that been through a downturn.   I’ve been successfully investing in real estate directly since 2002, and the housing crisis and mortgage meltdown of 2007 to 2009 was actually good for me - as I’ve discussed on other shows.   Now, for you to get a gain - your HELOC interest rate that you’re paying should be the same as, or lower than, the cash-on-cash return of the income property that you’re buying with the HELOC funds.   That’s because it’s cash that you service the I/O HELOC payments with - and you’re really keeping an eye on that when your Draw Period comes to an end.   Remember that HELOC rates have been rising and they’re poised to keep rising.   Now, I already know what you’re thinking. You’re excited about real estate investing and building your portfolio and if you have some equity in your home, you might even be thinking something like:   “Even if my income property’s CCR ends up lower than my home’s HELOC interest rate, it’s all going to work out for me because when I consider that the income property pays me 5 ways (of which the CCR is only one of those five), my Total Rate Of Return will dwarf the smaller HELOC interest rate.   I know you might be thinking that. And you know what, you might even end up being right and it will work out for you, but now you’re tilting into a riskier area.   And you’re going to do whatever you’re going to do….   ...but the Mortgage Meltdown ten years ago proved to me that liquid cash flow is what services HELOC payments.   The other four ways you’re often paid - appreciation, loan paydown paid by the tenant, tax benefits, and inflation-hedging - none of those profit centers are liquid.   By the way, and thanks for the question Michael -   Now, I’ve had some detractors in the debt-free School Of Thought that won’t even entertain the notion of harvesting equity from their own home and buying rental property with it.   But I do it...and I’m not telling you to do it...I’m saying make your own decision. But some even say things like - I bet you won’t like your decision when we have another mortgage meltdown like we did ten years ago.   My response is - this way, I’m better positioned in a mortgage meltdown. During the Housing Crisis, some markets even lost 50, even 60% of their housing values.   In a meltdown, I’m going to be really happy that I didn’t have a lump of equity all in one property just in one market.   Plus, during all that time leading up to a potential future meltdown, I will have had positive cash flow the entire time.   I’ve even had a couple people - that just don’t ever seem to want to think abundantly say - well what if things go beyond a recession and we’re in an all-out depression and everyone loses their job and Americans are massively starved for food.   Then the person that rents your Kansas City property won’t have their medical job to pay your rent anymore, and the Fedex employee in Memphis that rents your place won’t have a job and your cash flow will dry up.   Sheesh, if we’re in an all-out Depression, and the economy breaks down, no one accepts the dollar, and there’s anarchy and mass starvation and looting and Americans don’t even have clean water and everyone’s defaulted on every loan they have, then the fact that you lost the cash flow on your St. Louis rental property is not even going to be one of your Top 20 problems.   So...I don’t know what these people are thinking. Now...   When you’re running your numbers on a single-family income property that you’re thinking about buying and you get a CCR greater than 10%, you know, these days. I want you to look at that CCR with a magnifying glass.   Many markets have prices rising faster than rents that can keep up proportionally. You can still get 10% on a SFH, but not as easily as before.   And I still don’t know of a better place to invest right now than SF income property.   And I don’t think we’re in any kind of housing “bubble” now.   A bubble is defined as a price level unsupported by fundamentals. Today, supply shortage is driving demand.   Therefore, it is very much still a fundamental price increase, not a bubble - in these stable inland markets where we buy homes a little below the median housing value.   So...know the pros and cons of strategic investment moves like a HELOC origination.   Your goal, as a successful investor, is to maximize your ROI throughout your investing lifetime.   I frequently sell or refinance properties due to that fact that equity-heavy properties decrease your ROE - your Return On Equity.   Financially-free beats debt-free. The debt-free person asks a question like “Where do I think I can be someday?”   The financially-free person instead asked themself a better question - what do I have right now to make my & my family’s life better now - what tool do I have that I didn’t even know I had.   What knowledge do I have now, what talent do I have now, what property equity do I have now, what relationships do I have now.   So...thanks for the listener questions today. I only got to three. There is such a backlog of questions that I’ve got.   I wanted to answer three that I felt would be most applicable to the greatest number of people.   Well, ATTOM Data’s Senior VP Daren Blomquist is back with us today.   We’re going to discuss how among homeowners - they’re staying in their homes longer than before - but renters are not included in this - so note that this isn’t a direct measure of transiency.   There are so many reasons for why homeowners are staying put longer   Low interest rates that they locked in years ago often means they don’t want to leave. Mortgage underwriting standards are tougher than they were pre-recession. The supply of replacement properties is low. To a lesser degree - our population aging - the older one gets, the less they move. The supply problem is getting so bad that people increasingly are using data sets of predictive analytics and Artificial Intelligence to tell if someone is about to sell their home.   All that’s next, plus where the more undervalued Midwest & South housing markets are for income property today. You’re listening to Get Rich Education. ______________   For those figures Daren was using in comparing various metro housing market prices to their pre-recession peaks, those numbers are not adjusted for inflation. Keep that in mind.   So if over the last decade we had a cumulative 30% inflation over all those years, then a housing price that’s 30% greater is essentially the same. Very important distinction there.   Thanks again to Daren Blomquist.   I know that you’re a Get Rich Education listener, but are you a Get Rich Education watcher? Get Rich Education TV is developing.   Understand that a lot of changes are taking place there as it’s just evolving.   If you want free education, motivation and tutorial videos from me - just go to GetRichEducation.tv for more.   Let me know what you think about Get Rich Education TV. Land there directly at  GetRichEducation.tv.   Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Day Dream!  

#163: Home equity is a terrible investment - it is unsafe, illiquid, has zero ROI, makes your foreclosure risk greater, and it can leave your assets exposed to lawsuits. Some have called today’s material shocking - a revelation. What you thought was black is white. What you thought was dark is light. Home equity can never go up in value, but might go down value. You must embrace mortgages. I collect mortgages every bit as much as I collect cash-flowing properties. I practice what I preach and only keep 15% equity in my primary residence, and minimum equity positions in investment properties. You would be better off burying money in your backyard than using it to pay down your mortgage. In the 1920s, a common clause in bank loan agreements stated that your loan could be called due at any time. That created fear which still resonates today. But it’s no longer true; banks won’t call your mortgage loan due anytime. 30-year vs. 15-year vs. interest-only mortgage loans are examined. Homes are not meant to store cash, they’re meant to house families. Holding too much equity in any one property can kill your wealth potential. If you want wealth, you need to consider dispersing your home equity among many income-producing properties across different geographies. Want more wealth? 1)    Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2)    Actionable turnkey real estate investing opportunity: GREturnkey.com 3)    Read my new, best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 01:37  Eliminating debt often postpones your financial freedom. 04:05  In the 1920s, a common clause in bank loan agreements stated that your loan could be called due at any time. That’s no longer true. 07:23  Paying off debt prevents you from accumulating assets. 08:48  Liquidity, safety, and rate of return are three reasons for keeping a high mortgage loan balance. 11:35  Why your foreclosure risk is greater if you have a high equity position. 16:33  Natural disasters. 19:56  Getting sued, asset protection. 21:40  The ROI from home equity is always zero. 26:15  Cash-out refinances and 1031 Tax-Deferred Exchanges. 28:12  Be your own banker. Create arbitrage. 29:00  30-year vs. 15-year fixed rate amortizing vs. interest-only loans. 30:42  Another example of home equity providing zero ROI and being unsafe. 33:04  Enjoy collecting mortgages. Equity transfers. 34:37  Those with less financial education want to pay off their properties. 36:55  Outsource lower use tasks. 38:56  Control. 40:04  Mortgage payments vs. housing payments. 42:27  A house is not an asset. 43:58  Act at RidgeLendingGroup.com for loans, GREturnkey.com for properties. Resources Mentioned: GREturnkey.com RidgeLendingGroup.com CorporateDirect.com GetRichEducation.com   Here. It. Is. Hey, Welcome to Episode 163 of Get Rich Education - the show that at this point has created more passive income and financial freedom for busy people like you than nearly any other show in the world. I’m Keith Weinhold. Your financial forecast is going to be looking sunnier than ever after today. I’ll tell you why. But you know what, your open mind might very well find the content in today’s show shocking. Some people have believed the same old antiquated thing for so long, that they figure that the notion that has been believed for so long MUST absolutely be true - merely because it’s been believed for a long time. Yes, just because you’ve believed something for a long time, doesn’t make it true. It’s sort of like - I think Yoda even said it - “You must unlearn what you have learned”. A lot of times you need to unlearn the old before you’ve made room for new ideas. Eliminating your debt can actually postpone your financial freedom. You need to form both the habits and the actions that produce income streams. Well, you can’t very well do that if you put your money toward retiring debt. Focusing too much on becoming debt-free means that your money is being sent away to retire. That’s why you can’t retire. You can’t retire - or be financially-free - because you’ve sent your money away to retire - rather than work for you. If you could invest in something that could never go up in value but could only go down in value, then how much of that invest would you want? Well, zero - right? We’re intelligent people that invest for the production of income, not speculate on a hope for capital gains. The investment that can never go up in value but can only go down in value is home equity - or even your rental property’s equity. In fact, I have the ability to pay off my home’s mortgage but I refuse to do so. I embrace mortgages. I don’t fear them. Many Americans believe these following statements to be true, but in reality they are myths and misconceptions: OK, here we go: Your home equity is a prudent investment. FALSE Extra principal payments on your mortgage saves you money. FALSE Mortgage interest should be eliminated as soon as possible. FALSE Substantial equity in your home enhances your net worth. FALSE Home Equity has a rate of return. FALSE THERE IS A REASON WHY SO MANY PEOPLE FEAR MORTGAGES, AND WHY YOU SHOULDN’T In order to discover how our great grandparents and our grandparents and even our parents and perhaps even you - got the idea that a mortgage is a bad thing and a necessary evil at best, we must go back in time to the Great Depression - and then we’re going to bring it up to the Present Day here... In the 1920s a common clause in loan agreements gave banks the right to demand full repayment of your mortgage loan at any time. Since this was like asking for the moon and the stars, no one really worried about it. Then, when the stock market crashed on October 29, 1929 millions of investors lost huge sums of money, much of it on margin. Back then, you could buy $10 of stock for a $1. Since the value of the stocks dropped, few investors wanted to sell, so they had to go to the bank and take out cash to cover their margin call. It didn’t take long for the banks to run out of cash - so they started calling loans due from good Americans who were faithfully making their mortgage payments every month. However, there wasn’t any demand to buy these homes, so prices continued to drop. To cover the margin calls, brokers were forced to sell stocks and once again there wasn’t a market for stocks so the prices kept dropping. Ultimately, the Great Depression saw the stock market fall more than 75% from its 1929 highs.  More than half the nation’s banks failed and millions of homeowners, unable to raise the cash they needed to payoff their loans, lost their homes. Out of this the American Mantra was born and it said this: “Always own your home outright. Never carry a mortgage.” The reasoning behind America’s new mantra was really quite simple: if the economy fell to pieces, at least you still had your home and the bank couldn’t take it away from you. Maybe you couldn’t put any food on the table or pay your bills, but at least your home was secure. Since the Great Depression laws have been introduced that make it illegal for banks to call your loan due. The bank can no longer call you up and say, “We’re running a little short on cash and need you to pay off your mortgage loan in the next thirty days.” That just can’t happen. Additionally, the Fed is now quick to infuse money into the system if there is a run on the banks, as we saw in 1987 and we sort of saw with Quantitative Easing later. Also, the FDIC was created to insure banks. Still, you can see how the fear of losing their home became instilled in the hearts and minds of the American people, and they quickly grew to fear their mortgage. In the 1950’s and 60’s families would throw mortgage burning parties to celebrate paying off their home. And so, because of this fear of their mortgage, for about 90 years now most people have overlooked the opportunities their mortgage provides to build financial security. SO THERE’S A REASON WHY PEOPLE HATE THEIR MORTGAGE AND WHY YOU SHOULDN’T Many people hate their mortgage because they know over the life of a 30 year loan, they will spend more in interest than the house cost them in the first place. To save money it becomes very tempting to make a bigger down payment, or to make extra monthly principal payments.  Unfortunately, saving money is not the same as making money. Or, put another way, paying off debt is not the same as accumulating assets. By tackling the mortgage pay-off first, and the investing goal second, many fail to consider the important role a mortgage plays in your effort toward financial freedom.  Every dollar we give the bank is a dollar we then...did not invest. While paying off the mortgage saves us interest, it denies us the opportunity to earn greater interest with that money.  Are you still doing something like this? “Hey Mr. Banker, here is an extra $100 principal payment. Don’t pay me any interest on it. If I need it back, I’ll pay you fees, borrow it back on your terms, and plus I’ll try to prove to you that I qualify again.”  Some people - a lot of people - still do that! That is fear, scarcity, and a lack of education rather than knowledge, abundance, and mastery. Money you give the bank is money you’ll never see again unless you refinance or sell that property - whether that property is your primary residence, or it’s one of your income properties. Why separate the equity from your home? Why would you want to have the equity removed from your home? There are actually three primary reasons: 1. LIQUIDITY 2. SAFETY 3. RATE OF RETURN - there are many more reasons too. But, let’s focus on those. HOW LIQUID IS IT? (Can I get my money back when I want it?) 2. HOW SAFE IS IT? (Is it guaranteed or insured?) 3. WHAT RATE OF RETURN CAN I EXPECT? Home equity fails all three tests of a prudent investment. Let’s examine each of these core elements in more detail to better understand why home equity fails the tests of a prudent investment, and, more importantly, why home-owners benefit by separating the equity from their home. So why SEPARATE EQUITY TO INCREASE LIQUIDITY? Well, what is one of the biggest secrets in real estate? It’s that your mortgage is really a loan against your income, moreso than a loan against the value of your house.  Without an income, in many cases you just can’t get a loan. If you suddenly experienced difficult financial times, would your rather have $50,000 of liquid cash to help you make your mortgage payment, or have an additional $50,000 of equity already trapped in your home? Almost every person who has ever lost their home to foreclosure would have been better off if they had their equity separated from their home in a liquid, safe, conservative side fund that could be used to make mortgage payments during their time of need. The importance of liquidity became all too clear when the stock market crashed in October of 1987, or March of 2000, or September of 2008. If someone had advised you to first sell your stocks and convert to cash, they would have been a hero. Or, if you had enough liquidity you could have weathered the storm. Those with other liquid assets were able to remain invested. They were rewarded as the market rebounded and recovered fully - sometimes pretty quickly. However, those without liquidity were forced to sell while the market was down, causing them to accept significant losses. “It’s better to have access to the equity or value of your home and not need it, than to need it and not be able to get at it.” Of course, I don’t advocate for people to have much exposure to stocks because that isn’t where the wealth is created. If you want to build wealth, keep your equity out of stocks, and maintain small equity positions in many income-producing properties. TO REDUCE THE RISK OF FORECLOSURE DURING UNFORESEEN SETBACKS, KEEP YOUR MORTGAGE BALANCE AS HIGH AS POSSIBLE Is your home really safe? Unfortunately, many home buyers have the misconception that paying down their mortgage quickly is the best method of reducing the risk of foreclosure on their homes. However, in reality, the exact opposite is true. As homeowners pay down their mortgage, they are unknowingly transferring the risk from the bank to themselves. When the mortgage balance is high, the bank carries the most risk. When the mortgage balance is low, the homeowner bears the risk.  With a low mortgage balance the bank is in a great position, as they stand to make a nice profit if you defaults. In addition to assuming unnecessary risk, many people who scrape up every bit of extra money they can to apply against principal often find themselves with no liquidity. When tough times come, they find themselves scrambling to make their mortgage payments. Alright, just imagine this scenario. Assume you’re a mortgage banker - you’re sitting in your plush leather chair in your corner office - and you’re looking at your loan portfolio as this mortgage banker that you are, and you have 100 loans that are delinquent. All of the loans are for homes valued at $600,000. OK, so you’ve got all hundred of these $600,000 homes - and your borrower payments have become delinquent on every one. Some of the loan balances are $300,000 and some are $500,000. Suddenly, there is a glut in the market and the homes are now worth $400,000. Which homes do you as the banker foreclose on FIRST? The ones owing the least amount of money, of course. After all, as a banker you’d make money taking back those homes, however you’d lose money trying to sell a home for $400,000 when you still would have been owed $500,000 on it if you just keep that in your portfolio. Banks have been known to call delinquent homeowners with high mortgage balances and offer assistance to those people - they’re not going to try to foreclose on them. In that case, as a mortgage banker in your plush leather chair, you’re going to get on the phone with your homeowner / borrower and you’re going to say, “We understand you are going through some tough times, is there anything we can do to help you? We really want you to be able to keep your home.” The last thing they want to do is take back a home that they will lose money reselling. Because that homeowner smartly kept their mortgage balance high. So you as an owner of your own home or owner of income property want to keep your mortgage balance high and your equity position low. If you fall ill or become incapacitated in a car accident and you’re not able to work, you want to be sure that your family is protected. Well, while you’re in a hospital bed - or worse - or you’re gone - the bank is going to foreclose on those homes that have a low mortgage loan balance first. Those with a high mortgage loan balance will get the workouts. More equity is more risk. So that’s why I wanted to put you in the position of YOU as the mortgage banker in your leather easy-chair. Don’t vilify the banks with being ruthless with foreclosing on those with high equity positions - because if you were given two equally difficult tasks, which would you do first?  If you had two wheelbarrows sitting in front of you, you had to push each one up a hill, and one wheelbarrow was empty and the other one had 100 pounds of concrete in it that you had to grunt and struggle to push up the hill - yet both tasks paid you the same, then which wheelbarrow are you going to push up the hill first? It’s the light, empty one.  You know, it’s interesting to note too, during the Great Depression, the Hilton chain of hotels was deeply affected by the stock market crash and Hilton couldn’t make their loan payments. You know what saved them from financial ruin? They were so leveraged, in other words they owed so much more on their property than it was worth, that the banks couldn’t afford to bother wasting their time foreclosing on it. The Hiltons understood the value of keeping high mortgage balances thereby keeping the risk on the banks. Closer to the present day here... Hurricane-ravaged homeowners in Florida, or New Orleans, or Houston would have been better off if they had removed a large portion of their equity and put it in other cash-flowing properties around the country - or they would have been better off even keeping it in a safe and liquid side fund, accessible in a time of need. Ask yourself, if you’re a California resident, and you own a million dollar home during an earthquake in California (and you didn’t have earthquake insurance like many don’t), would you rather have your equity trapped in your home, or would you rather have more of it in income-producing properties in the Midwest and South?  If it were trapped in the California home, your equity would be lost along with the house in the earthquake.  What about litigation? In the event of a widespread disaster where an insurance company could be at risk with making massive payouts to a ton of homeowners, that insurance company often has incentive to come up with reasons not to pay the insurance claim - or delay paying the claim - probably at a time where you and your family are displaced and you’re staying at a modest hotel while your life is in a shambles.  We saw this happen in national disasters recently. If your home is rendered uninhabitable in the event of a natural disaster and there’s a dispute about what exactly damaged your home -  You know, was it the hurricane’s wind or was it the storm surge or the wind that led to the storm surge or the hurricane’s rain that led to the flood - or - what can you make a claim for then? I mean, do you want to be in the scenario where you have to hire a lawyer to fight the insurance company? Especially at a time where you or your family are vulnerable and uprooted while you’re all staying at the Holiday Inn? Well, if you have a lot of skin in the game - a lot of equity - you’re going to be the one most likely to have to research what legal counsel is the best and then hire, pay for, and retain legal counsel against the insurance company. If you don’t have much skin in the game, and you’ve left the bank with the greater equity position, then the bank is going to have the incentive to want to hire the attorney. See, with every mortgage paydown that you make, you have increased the bank’s security in this property risk and you’ve decreased your own security and decreased your own peace of mind. More equity is more risk. See you thought it was the opposite. Previously you thought paying down a mortgage increased your feeling of security. Sometimes, you can get insurance to prevent risk of loss in the event of a hurricane, or an earthquake, or a fire, but see, even then, there’s no such thing as property equity insurance. The homeowners with the least financial education are more likely to get foreclosed upon first.  What if you’ve got a lot of equity in a property and you’re having a Cinco De Mayo party and a neighbor kid falls off your deck? Well, now the neighbor kids parents want to sue you. We live in a litigious society. When that neighbors plaintiff attorney sees that you don’t have much low-hanging fruit as equity to go after, the lawsuit might never even come your way in the first place.  A low equity position is an effective asset protection strategy. Make the bank share in the risk with you. Again, that’s really an example of making OTHER PEOPLE’S MONEY work for you - other people’s money - the bank’s the helping protect you.  My home - our primary residence - has a market value of between $450K-$470K, and my mortgage loan balance at this moment is almost exactly $400K. I’ve intentionally taken proactive measures to keep my mortgage balance high and my equity position low. That’s about 15% equity in my home there - something like that. I practice what I preach.  This limits my risk, it’s increased my liquidity so instead I can turn these equity dollars into down payments on more income property across the nation, and it increases my overall rate of return substantially. You’ve got to think about SEPARATING EQUITY TO INCREASE your RATE OF RETURN as well. Here’s a question for you. What do you think the rate of return from home equity was in Boston for the last 3 years? What about Seattle for the last one year? Be careful, this is a trick question.  The truth is, it doesn’t matter where you live or how fast the homes are appreciating, the return from home equity is always the same, it is ZERO.  We have a misconception that because our home appreciates, or our mortgage balance is going down, that the equity has a rate of return. That’s not true. Home equity has NO rate of return. Home values fluctuate due to market conditions, not due to the mortgage balance. Your home or income property’s value fluctuates on population growth, job growth, supply vs. demand and all kinds of other factors.  But the equity in the home has zero relation to the home’s value, it is in no way responsible for the home’s appreciation.  Therefore, home equity simply sits idle in the home. It does not earn any rate of return. Assume you have a home worth $100,000 which you own free and clear. Or if you have a $100,000 property with just $20,000 of equity in it, if the home appreciates 5%, you still own an asset worth $105,000 at the end of the year. Now you’ve got a 25% return on your skin-in-the-game because you’re leveraged - not just a 5% return. The market provides the return whether equity is in there or not. I actually cover this topic quite a bit in my first book, which was published earlier this year. Homeowners would actually be better off burying money in their backyards than paying down their mortgages, since money buried in the backyard is liquid (assuming you can find it), and its safe (assuming no one else finds it). However, neither one is earning a rate of return. It’s actually losing value due to inflation. I’ll be back with so much more. You’re listening to Get Rich Education. Alright...suppose you were offered an investment that could never go up in value, but might go down. How much of it would you want? Hopefully none. Yes, that investment is home equity. It has no rate of return, so it cannot go up in value, but it could go down in value if the real estate market declines or the homeowner experiences an uninsured loss like a natural disaster sort of calamity, or your own body or mind’s disability, or a foreclosure.  That’s why rather than paying down any mortgage, instead, once equity accumulates, I use cash-out refinances and 1031 Tax-Deferred Exchanges to invest that dollar in more cash-flowing property.  The return from equity is always zero so I want to reduce my equity exposure that I have in any one property. But borrowing equity out of a property incurs an interest rate expense. But as long as I beat that interest rate expense incurred with the return from that reinvested dollar, I’m dollars ahead.  ...and if I can borrow at say, a 5% interest rate, sheesh, I’ve talked a number of times on how investing into new, cash-flowing turnkey income property with long-term fixed interest rate debt pays you five ways at the same time such that rates of return of 30% per annum are actually common. This increases your velocity of money too - rather than letting your equity slowly cut too deep into any one property. Accelerating loan paydowns would cut my leverage ratio. We discussed that last week here on the Get Rich Education podcast. Let’s talk about THE COST OF NOT BORROWING (EMPLOYMENT COST VS. OPPORTUNITY COST) When homeowners separate equity to reposition it into more income property, or even a liquid, safe, side account, a mortgage payment is created on the portion that you’ve borrowed out. The mortgage payment is considered the Employment Cost. What many people don’t understand is when we leave equity trapped in our home, we incur the same cost, but we call it a lost Opportunity Cost. The money that’s parked in your home doing nothing could be put to work earning you something. So create arbitrage for yourself. Learn to...effectively be your own banker. By using the principles that banks and credit unions use, you can amass a fortune. A bank’s greatest assets are its liabilities. You can substantially enhance your net worth by optimizing the assets that you already have. By being your own banker you can make millions extra. It’s not necessary to have a large chunk of equity in your home to benefit from using your mortgage to create wealth. Many homeowners without a large equity balance have benefited by simply moving to a more strategic mortgage which allows them to pay less to their mortgage company each month, thereby enabling them to save or invest more each month. Even if you don’t have a high equity position, if you have a 15-year loan, you can increase your monthly cash flow by switching it into a 30-year fixed amortizing loan. I once made the same mistake. I once had a 15-year loan on my own home and changed it to a 30 once I understood this. Say the 15-year loan monthly payment is $700 more than the 30-year fixed amortizing payment - well wouldn’t I rather have that $700 either in liquidity or have the ability to put it into an income-producing investment? On an income property if you have a 15-year loan rather than a 30-year loan - the property probably won’t cash flow either. I actually favor interest-only loans the most. But they can still be hard to find these days. Interest-onlys got a bad name 10-20 years ago because some people took out those loans because not paying principal was the only way they could afford a property - a property that didn’t even generate income. I favor interest-onlys because rather than having my extra dollars go to principal, that goes right into my cash flow pocket instead. With income property, both inflation and tenants make my mortgage principal balances erode without me having to get involved with principal paydowns which is something that only corrodes my cash flow.  Let’s just look at another example, I gave one similar to this in my new book. If you’re in, say the U.S., or Canada or wherever and you own a $300K home, and just for ease of numbers your home appreciates 10% and goes up to $330K over some period of time, did it matter how much equity was in the home?  No. Again, either appreciation or loss in value has nothing to do with your skin-in-the-game - it has nothing to do with that equity inside the walls of your home, and everything to do with what’s happening outside the walls of your home… ...like demographic trends or the remaining availability of developable land in your geography, or a national tightening or easing of lending standards. That’s what affects market value. What if the value of your $300K home goes down to $200K in value? Well, then if you had $100K of property equity exposed, it’s all gone. So although the home fell in value 33%, your equity fell in value 100%. Now you understand why property equity is UNSAFE. So, #1, prevent equity from accumulating, and #2, spread it around into other properties in different geographies. When you do that, you’ve planted a small equity seed that has substantial room for growth in a new property. So, I think big-picture, rather than retiring mortgages, I’m acquiring mortgages and integrating them into my financial plan. Rather than fighting to get rid of mortgages, I’ve embraced them, brought them onto my side, and I don’t want them to go away. I use it as a tool.  You can think of your mortgage as a competitor, or as a collaborator. Life is a lot more harmonious and plentiful when you turn competitors into collaborators. I don’t just enjoy collecting properties, I enjoy collecting mortgages.  The way I’ve lived for a long time is that I don’t want to have my home or any income property paid off by the time I’m age 40, or 60, or 120. When I pull equity from one property and use it as a down payment toward another property, I haven’t actually lost any equity (though I might have a corner chipped off for closing costs or agent commissions), but rather than losing equity, I’ve just transferred equity. It’s still my equity. Now consider that when I pull equity from my home to put it into an income property, I typically incur a higher home mortgage payment than what I had previously.  But as long as the difference between the new home mortgage payment amount and the old payment amount is exceeded by the positive cash flow that I receive from the new rental property, I am dollars ahead on a monthly basis. ...plus I have all the other benefits of owning a real estate portfolio that’s greater in value.  I now have two properties to potentially appreciate in value rather than one. So before, rather than just having a $300K home, you might still have your $300K home, plus a $200K income property - for $500K of total property, plus greater tax benefits and monthly cash flow. You know, as I go through life, I find that those with less financial education say something like, “I can’t wait until I have this property paid off.”  Well, it’s sort of like when someone tells me they have a boatland of money saved at the bank at under 1% interest. I’m thinking, “OK, that’s good. I see potential there, now what are you going to do with it?”  Money earning nothing at the bank is actually better than home equity because it’s more liquid.  Understanding this stuff and putting it into practice is how I, as an investor, got ahead farther faster. Instead of learning about how to replace garage doors or how to clean a chimney in the most efficient way, learn about big picture forces like arbitrage. leverage, cash flow, inflation, and smart equity mgmt.  It’s going to get you ahead farther, faster. Outsource lower use tasks and replace them with higher-use tasks and you’ll be living better than you ever thought you could.  I think some people get content being their own landlord because they just don’t know what else they could do if they would only think big picture. So those people instead beat around in an old Ford F-150 managing their own properties. They rationalize that their life isn’t so bad compared to those without clean water in Ethiopia or Malawi. So they stay content trying to fix the furnace at the four-plex themselves.  Maybe they’re ordering a couple meatball subs on a lunch break and then listening to sportsradio in the afternoon. I mean, hey, if you’ve explored enough of the world to know of a different way of life and you still like the twenty-year-old Ford F-150 life where you’re managing your own property and storing canisters of touch-up paint where you’ve got al these lids labelled for the different rental units it goes with and it takes up 10% of your garage all that, then that’s fine. As an investor, you’ve got laborers standing by just waiting to work FOR you - these laborers have names like “Tenants” “Leverage” “Arbitrage” and “Inflation”. You need to know that there is a better, higher-use way to live. Outsource lower use tasks and replace them with higher-use tasks and you’ll be living better than you ever thought you could. Now, if someone would ask me if I would want more property equity than I’ve currently got - someone was just looking to “gift” some equity to me. Yeah, I’d take it, but I’d think of it as the ability to disperse and distribute seeds. Initiate that velocity and spread it into more properties. The thing is that you can’t just understand this stuff or it isn’t going to help you. You’ve got to do it. You must act. Mere knowledge doesn’t do you any good.  I’ve conscientiously decided that I’m going to be abundant. I’m going to go out and control more. There are a few limits here. You probably don’t want to lock up everything. It’s good to keep some liquidity on-hand. I’ve talked about how it’s a good idea to have 3-5% of your total real estate portfolio value in liquid funds as reserves.  Consider that if you get underwater on your primary residence, it might make it hard for you to move if you have to move.  If you already live where you truly want to live, why would you have to move - and why would you live anywhere other than where you want to live? You don’t follow money. You’ve made money - income streams - follow you.  Think about your control of a property too. You know, whether you have a 5% equity position in your property or a 60% equity position or a 100% equity position in your property, you still have the same right to tear down the fence at your home or paint your home or add a carport to a rental property that you own. Your equity position doesn’t affect your control at all. Less equity, same control. Less property equity also increases your tax deductions because mortgage interest is typically tax deductible. So, no one achieves financial freedom just by eliminating their debt.  This is a central tenet to the Get Rich Education paradigm: “Financially-Free Beats Debt-Free”.  Some people might just say, oh, eliminating the mortgage would just make me feel good. Well, consider what that good feeling is costing you. Once you’re educated, debt-free doesn’t feel so good. You’re actually taking steps away from being financially-free. Plus, if you eliminate a mortgage payment, consider that you STILL have a monthly housing payment. You’re still going to have to pay property taxes, property insurance, pay maintenance, pay repairs, utilities, maybe pay HOA dues.  So even complete elimination of a mortgage payment doesn’t nearly eliminate your HOUSING payment.  Even though I have the ability to pay off my home, that would be one of the most reckless and financially uneducated things that I could think of. I’d probably have to sell some income-producing property in order to make the payoff.  Some people say that they don’t want to pull equity from their primary residence because they say that their existing mortgage is at such a low interest rate - 5% or 4% or lower.  Well, oftentimes, you can keep that first loan in place - not touch it - not reset its amortization schedule - not disturb that rock-bottom interest rate...I get it...my primary residence has a 3.5% interest rate on a 30-year fixed-rate mortgage. And what you can do then is add a Home Equity Line Of Credit second mortgage onto the property so that you catalyze your velocity of money. Homes are meant to house you & your family. Not store cash.  When money talks, do you listen? Or do you revert to thinking about what your Dad thought - or what your Uncle thought - or revert to that Depression Era of thinking. You know, most all of these principles that I’ve talked about earlier here - these were even true when mortgage interest rates were 16 to 18% in the early 1980s. You can take ever great advantage of this “Financially-Free Beats Debt-Free” plan today when mortgage interest rates are comparatively anemic.  You’ve got to go against the beliefs of traditional, old-fashioned thinking.  What you thought was black is white. What you thought was dark is light. If you act, your financial forecast looks substantially sunnier than you though. You won’t be able to retire if you send your money away to retire locked up in a home’s walls. Now you’ll need to spend more of your life working.  The greatest-selling financial author of all-time, Robert Kiyosaki, who has been on the show with us here a couple times, of course - he famously said that a house - your primary residence - is not an asset. A house is not a financial asset.  It is a liability because it takes money out of your pocket every month. As asset puts money into your pocket every month.  So keep your skin-in-the-game in this liability - your home - to a minimum - and place that equity into assets - cash-flowing turnkey real estate in the best markets. Your home is less of a liability to you when the equity is intelligently managed. But importantly, you’ve got to act, rather than sit idle on this information. These are the kind of discussions that shape you and your family’s life - that open up time for yourself and passive income for yourself… ...that got your kid the new hockey pads so that he could play on the hockey team and you had time to go watch her or him. …that got you to Kauai when you and your family hiked that trail on the North Shore rather than deferring everything until some fictitious “someday”.  You’ve got to ACT.  You know the old Chinese proverb. Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime. Well, which one sounds better - teaching a man to fish or giving a man - or woman - a fish? It is doing BOTH. That’s the abundance mentality. So at Get Rich Education, we teach a man to fish. We also give a man a fish, Ridge Lending Group specializes in investment property loans. They’ve helped more people realize their dreams of financial freedom through real estate than any other mortgage lender in the country. So RidgeLendingGroup.com is in the Show Notes for you.  Well then where do you actually find the income properties in investor-advantaged markets with in-place property management so that you can intelligently reposition your home equity if you choose to?  We both teach a man to fish here at Get Rich Education and then we give a man a fish at GREturnkey.com - where there are - more than 10 markets that I’ve hand-selected myself - this is a lineup of markets and providers - many of whom I’ve invested in myself…  ...where you can download a report on a few investor-advantaged metros, read it at your leisure, and then that report also has the provider information so that you can follow up with them should you so choose. Often, it’s those markets in the Midwest and South.  GREturnkey is in the Show Notes as well. So it has just never been easier.  Thank you for being here, but again, you aren’t here for me, you are here for you. I will be back next week to help you build your wealth. Remember, home equity is a terrible investment, and financially-free beats debt-free. Don’t quit your day dream.