How to Convert Home Equity into Cash Flow for Financial Freedom

You’ve got home equity, but maybe not cash flow. If you want to realize financial freedom, you’ll need consistent, passive monthly income. But with cash flow harder to find than ever before, how can you get it when real estate prices and interest rates remain high? Should you give up on cash flow entirely and only bank on appreciation? Maybe not. Using the strategy David outlines today, you can convert your equity into cash flow, but you’ll need to follow the right steps.

Welcome back to another Seeing Greene episode, where David, and some expert guests, answer your questions surrounding anything and everything related to real estate investing. Joining us on today’s show are Dave Meyer, J Scott, and Pat Hiban, all BiggerPockets authors and real estate masters in their own rights. They tag-team questions ranging from how to get around the twenty percent down payment requirement, how to calculate the time value of money on an investment, how HELOCs (home equity lines of credit) work, whether investing in hurricane-heavy Florida makes sense, and more!

Shop the BiggerPockets Bookstore Cyber Monday Sale:

00:00 Intro
02:06 Quick Tip
03:14 Getting Around 20% Down
16:28 Questions from the Comment Section
26:07 The Time Value of Money
33:10 How Does a HELOC Work?
35:05 How to Convert Equity into Cash Flow
44:40 Is Investing in Florida Worth It?
51:49 Ask David Your Question!

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Episode 693

#biggerpockets #realestatepodcast #seeingreene

[erinh]

Respect to you David for still going strong on this podcast been listening for 4 years now.

[naureenkhashwji]

God I can’t believe how much VALUE you give David! Love how you explain things SO WELL! I watch it because you’re the best host!

[danielkunimoto]

David, I definitely appreciate you responding to critical comments (and sharing with everyone) and responding calmly and sincerely about the value you guys provide every day to everyday people! Much respect!

[Andys_Auto]

I love how David handled that negativity. Once again proving that bigger pockets truly has your best interest in mind.

[isaacgarcia]

I only partially agree with Dave Myer. If Travis pulls his funds out and has them ready to go to work again, it may put a fire under his butt to find the next deal. I don't mean he should force the next deal, because that could end up a mistake. I'm only saying if he has those funds knowing he needs to put them to work, his RAS, may go in to hyper drive and find the deal quicker. As long as his new deals fits the framework for a great deal and he doesn't make a mistake by rushing, it may serve him to be under a little pressure. My goal with real estate is to get this thing going as fast as possible. Tomorrow is never promised and I'm anxious to hit some personal goals. Just me, thought I'd share. Thanks DG and Myers for all you and the other guys do for us investors. Your knowledge and guidance has been very very helpful 🙏

[huseyinkarakas]

First of all love the channel but with the 100s of episodes I've already watched, even though I've learned a lot, I still haven't found a video that suits a person like me.

My story is too long to tell but I'll summarize like hell. I deliver food for a restaurant and my W2 income for the year is around 25k. I own 4 short term rentals with partners on 3 of them and just purchased a 5th with no partner. My credit score WAS 795 in August and dropped down to 590 because I maxed out all my credit cards furnishing the new short term rental. It should be up and running in a month. But I have built up equity and all I keep hearing from this channel and other channels is Oh I had built up equity so I just got a HELOC and I used my HELOC to purchase another home and all this other Walt Disney story type shit and EVERY single time I speak to someone about a HELOC, they want proof of income from me and my W2 job shows that I make SHIT and they usually don't accept earnings from Airbnb as a form of income smfh. How tf am I ever gonna get a HELOC? I don't want to do a cash out refinance. I want a HELOC. It suits me better and I can't get it.

Sorry for kind of cursing a little but I'm kind of pissed and I need help and I'm not sitting back and waiting for help. I'm actually trying and calling and getting denied after denied after denied. So please make a video explaining how people like me who CANT prove their income but gross 300k a year can get a freakin HELOC. Thank you

[auricargento]

David, love your books. Would like your next book to cover...once you have a few SGF home rentals...how do you scale bigger and faster? I'm finding after about 5 or 6 rentals, you start hitting critical mass or sustainment. How or what options do you recommend to...get to that next level of more volume/bigger or greater return/ROI?

[temuerasamuel]

its mind blowing that all this information is free to view on youtube! Thanks BP. amazing content

[garrettjennings]

Thank you for all you guys do, I enjoy learning from the BP Podcast, On The Market, and RE Rookie! I'm 20 years old from Wisconsin. While first learning about investing at reia meetups, I decided to learn and make money as a real estate agent. I started a couple months ago, and now have a few closing coming up. I'll collect a little over $20, 000 from the month of November as those deals close. While I want achieve financial freedom through real estate investing, I was wondering how I can best deploy those funds for now. Deploy them into growing my business potential as a real estate agent, buying my first house hack, or buying a potential Airbnb deal out state. Looking forward to your advice!
Thank you!

[JustinVictorino_Joeyyy]

Literally the greatest Real Estate investing material and information on the planet. Y'all crushing it. If you guys host a seminar or meet up in the New York area please let us know!

[nicksantangelo]

Closed on a heloc back in October. Using it to buy a short term rental/crashpad that’s already in business that nets $4, 150 a month in revenue. Going to use whatever I get back in profit to pay down the heloc.

Already have a short term rental niche called a crashpad that nets $3, 300 a month in revenue. Profit is around $1, 800 a month.

[aarongiggers]

Hi David, I Would love to hear more about value add investing, converting single units into multi units and multi units back into single units when it's more beneficial to do so. also, all the logistics that go into it. Just a few ideas.

[kaycee]

David, I appreciate you tackling negative comments as well as the positive ones. Love the show. Keep up the good work!

[rogelioramirez]

David, thank you for all the information that you share, I would like to suggest if you can do one podcast focus on explaining all the types of loans that exist and how they work, I just found out from one of the banks that there is a balloon loan and they explained to me but I'm still a little confuse so that's why I think if you make a podcast explaining all this loans will help everyone.
Thank you very much and God bless you for what you do.

[BikeHelmetMk]

50:30 Key points there! Never accept binary outcomes if you can avoid it. Fortunes turn around fast. Plenty of examples - mill towns, mining towns, former tech hubs, former tourist destinations, towns where the trains stopped coming and cargo got expensive, etc.; while Disney is not likely to do poorly, and it'll probably be fine, that probability drives up the price of real estate, lowering your potential ROI. And if you're wrong, it's going to hurt... bad. Somewhere else might flatten out, while if something happens to Disney, your real estate might be down 70% almost overnight.

[carlosserrano]

Thank you Mr. Green for giving so much great advise.

[secretstoasafestressfreetr]

Thank you Mr David for your videos. I am very interested but I don't know how to start my 1st real estate investing. My husband will not support me on this idea so I will be doing it alone myself. I retired recently and already spent a big chunk of my savings on traveling so I will be starting with no down or very small down payment. Looking forward to your response. Thank you.🌹

[nellosnook]

1. Speaking in generalities is counterproductive with REI.
2. A particular asset may not be positively cash-flowing for a number of reasons.
3. If the REI analysis shows intrinsic negative value, then liquidation makes sense.
4. But if temporary, cyclic, economic factors are suppressing positive cash-flow, it could be prudent to acquire the property, patiently waiting until pro-growth economic policies are enacted, restoring the true ROI value of the property.

[erinlee]

Thankyou so much David and the Bigger pockets team, I love this community so much.

[richruelas]

Thanks David for putting this out. I am from California and I am going to take your advice on purchasing out of state since it is insanely expensive in Southern California. Going to use a first time home buyer house hack method you gave to the Augustinian!