If you’ve lived in your home for more than even just a couple of years, it’s likely that you’ve created some home equity or possibly substantial equity. You might even be mortgage free.
Because of the surge in housing prices over the past few years, if you purchased a property prior to 2016, you will most likely have had an increase in value and now be in a better financial position.
So, what do you do if you have home equity?
Well – you could do nothing other than just sit on it and enjoy the safety net you’ve created!
You could take out a home equity loan and put the money towards a new kitchen or bathroom.
Or, you could consider an investment property. Taking money from your equity to use as a down payment on a second property is a great way to utilize the cash that could be available to you. It’s likely you’ll need to come up with 20% of the purchase price as your down payment and you’ll need to ensure that you either have positive cash flow or that you are able to top up the short fall. You will create some tax breaks and future retirement income if it gets paid off before you retire or hold it until it goes up in value and sell it (there may be capital gains involved).
I’ve got personal experience with taking money from my home equity to purchase a rental/investment property, as well as lots of professional experience with clients. If you’d like to find out if this is a viable option for you, call me at 604-866-5697 and I’d be happy to chat with you!