If you decide that selling your house makes sense for you, either because you want to travel or you can rent for a much cheaper price, or for any other number of reasons, the key here is to ensure that you don’t just spend the profits. Of course, you’ll need to do your research about whether it makes sense financially for you to do this given the equity in your house and what you could potentially sell it for in the current market. You can read about how and why she made that decision in her guest blog article here. One of our students at EZ FI University actually decided this was the case. We understand this option might not make sense for everyone, but there are circumstances where this may actually make the most sense for your desired lifestyle and financial goals. This option may sound extreme, but in reality, the easiest way to flip your house from one side of the balance sheet to the other is to sell it. Below are just a few examples of ways to generate cash flow from you primary home. There are many ways that this can be accomplished, depending on your desired lifestyle, financial goals, and personal situation. This article will show you how you can do just that: turn your house into an asset instead of a liability. The simple definition of a liability is something that takes money out of your pocket.” So, according to this definition, your primary home is not typically an asset…unless it is putting money into your pocket. Here at EZ FI U, we subscribe to the simple definition provided by passive income guru Robert Kiyosaki: “The simple definition of an asset is something that puts money in your pocket. Yet for many real estate investors who have applied for a commercial loan will tell you that the lender regards your primary home as a liability, not an asset. Many will argue that because you’re building up equity in your home, it’s an asset. There is always 10-15% of the equity you are never going to get at – like the last few cups of water in my Brita filter dispenser… errrr! I see people try to quantify Helocs with interest rates but I feel that’s the bad way to argue its usage because it does not take into account the 10-15% left over in equity.There is an age-old debate about whether owning a house is considered an asset or a liability. I will say one bad thing about Helocs is that you can’t get a loan for the entire amount. Now some people can’t sell these properties to property optimize the equity into other investments and for those people cash-out refis and Helocs are an option.Ĭheck out this link and learn the nuances of the Heloc vs Cash-Out Refi strategy. One of these examples is to sell properties when the total return on investment decreases to a point to where the total returns (cashflow, tax benefits, appreciation, and mortgage paydown) get below ~15% or less than the next best thing. Personally, I don’t really have any restrictions of the sort but every situation is different especially if you have one of the aforementioned constraints. Now when you start to add things into the mix like your mother lives in your home, you want to househack your brother, your wife will only let you get two homes per year, or you can sell a condo for some random reason things get really hard. When you start out investing in Single Family Homes or Multi-family Class C/B… optimizing every single fee dollar (emergency fund of course) into down payments for more assets that put cash into your pocket, things are simple!
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