How Does a HELOC Work & Retiring a Millionaire with Real Estate

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How does a HELOC work? Can you use one to start investing in real estate when you’re low on cash? And, if you do decide to go the rental property investing route, how do you ensure you’ll retire a millionaire? If these questions have been keeping you up at night, worry not; David and Rob’s real estate wisdom is about to make those early retirement and financial freedom dreams a reality.

Welcome back to another Seeing Greene. As always, your expert investor co-hosts, David Greene and Rob Abasolo, are here to answer any and every real estate investing question you have. First, we answer, "Is an ADU (accessory dwelling unit) EVER worth building?" With the sky-high construction and labor costs, do these tiny homes make more sense now than ever? Next, we’ll break down how a HELOC (home equity line of credit) works, then David and Rob explain how they’d invest $300K in TODAY’s market and counsel a landlord/broker on how to retire a millionaire with real estate.

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00:00 Intro

01:09 Should I Build an ADU?

09:31 How HELOC Interest Rates Work

15:30 How to Invest $300K for "Passive" Income

25:05 My Tenant Has No Lease!

27:23 Comment Section Callout

28:50 How to Hit $1M Before Retirement

36:33 The Perfect Rental Portfolio
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I'm building a Adu right now, it has a 24'x24' garage, and 400 sq ft studio apartment. Total cost around 20k. It will rent for at least $800 per month.

ryanolson
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Am I the only one pulling my hair out that they ignored the entire premise of the ADU question and went on a tangent about how to spend $210K. He said he had a way of doing it for 10-15% of the 210K
He cannot buy a 400K property on build a house with $30, 000. Really wanted hear a rational thought on that one too

michaelsockwell
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Never heard of recasting your loan. You learn something new every day

Kate-fnrj
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23:46 I'm always glad to hear the standard advice of living below your means, even if you suddenly inherited a ton of money. I managed to finally retire early last year, but still drive the same car I have since college. I believe that not getting an expensive car helped me in achieving this goal. My car's paint is terrible looking now, but that's about it. It runs fine because I've kept up the maintenance.

Constellasian
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Soooo much great information, very much appreciate it. Thanks

margaritarodriguez
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36:39 I love the idea of portfolio architecture!

hansenmarc
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I am a mortgage loan officer and investor.

Recasts are underrated. They are beneficial but depends on your personal goals.

The way i look at a recast is the same i would look at an ROI.

If interest rate is 6%, and dump $10, 000 into a recast, your monthly savings are $116 which is about 13% roi (more cash flow) .. for simplicity I am not Ing the total interest you are saving over remaining of loan term.

ZiadTheLoanOfficer
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I always appreciate the content, you two! I learn new things every time. I also love that you guys dont always agree with each other... Hearing both perspectives just goes to show how many ways one can become successful in the real estate chess game!

aprilvancleve
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I heard an ad on spotify trying to tell people to open a HELOC to help pay for groceries.
It's so over

Player-gndc
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Great discussion on portfolio architecture

mravsolody
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Just heard you sharing my compliment, music in my ears David 💃💃💃

marylouisone
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I have an existing detached garage that I have pondered turning into an ADU. The more I ponder it the more I kind of just wanna jump at it. The sewer tie in isn’t far away(25 ft maybe), the electrical is already there, I would just have to move stuff out of there and get a contractor to look at it and wrap a drive way around.

tadsillman
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Hey guys.. I love the channel, keep up the good work. I have a quick question for you that I'm hoping you can answer. To get a HELOC, do you need to need to have a Job and show a source of income if you own all of your assets. In summary, I own my house (no mortgage), No loans on my cars, everything is paid off, and I have no debt whatsoever. I have 400k in stocks, plus a 401k, and IRA. I went to apply for a HELOC and I was approved, however, as I was waiting on the approval to come in, I was laid off from work. I'm not sure what impact this may or may not have.... Thoughts..?

Rickgsx
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In my position I ditched the W2 and now I’m a fly fishing guide. So getting a new loan for another home isn’t going to be as easy as it used to be, this is why I am thinking ADU

lyleburlingame
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450 sqft ADU is so small! 1200 is the max size here

lyleburlingame
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It is good to be a mixture of both show, still I think slow but stable is way to go, for my peace of mind

springdoan
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All home loans in Australia are line of credit, with redraw facilities. And all are variable interest rate. But you can lock the interest rate for up to 7 years at a time.
It’s really convenient. Every few years I redraw my equity and buy another investment property.

Fred_in_Oz
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Great answers on the HELOC. One thing I don't quite understand.
We need 70-80% LTV to open a HELOC on our property. Once achieved, the HELOC amount provided wasn't the remaining 20% but was a much smaller number. For example, I was offered $20k at 11% for a HELOC on my home valued at $425k with a loan balance of $318k. Why such a small amount?

devonblaine
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I can’t find any HELOC for my rentals in Georgia and Florida. Any recommendations would be appreciated !

bravedream
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5% on 200k you might find at a online only bank or you'll need more than 200k for a 5% rate. And those are cds not an money market account. 50k money market 4.25 and 150k at 4.65 cd is 8k+

legacyopp