So, you just purchased your Mayfair row home for $35,000, and after $2000 in closing costs and $5000 in maintenance costs, you find yourself a nice tenant who wants to rent the building. You still have an outstanding balance of $42,000 on your home equity line of credit after renting the home with a positive cash flow of $200 a month, which will have to be paid off. I did not get a mortgage when buying the house as I only bought a home for cash as it is said in the business. All of the money I invested on this house was invested on the home-equity credit line. Learn more about Vancouver real estate agency.
The step now is to pay off your credit line for home equity so that you can go do it again. We now go with your fixed-up property to a bank and tell the mortgage department that you want to refinance your real estate investment with a cash-out. It helps to clarify that the neighbourhood in which you buy your property should have a broader price range than the Mayfair neighbourhood did in the mid-90s. Since you can see a $3000 difference in home prices from one block to the next, the pricing of homes in Mayfair is very uncommon. When doing a cash-out refinancing, this was crucial because it’s pretty straightforward for the bank to see that I just purchased my property for $35,000 irrespective of the fact that I did a lot of repairs. I could justify the fact that I spent more money on my home to repair it because, from an investment point of view, it was now a lucrative piece of real estate by putting a tenant in.
If I was lucky as I’ve been several times over using this Mayfair home buying scheme, the appraiser will use homes a block or two away and come back with a $45,000 appraisal. There were services back then that allowed an investor to buy a home for 10 percent down or left in as equity doing a 90 percent cash out refinance that gave me around $40,500 back. The use of this strategy made it possible for me to get back much of the money I put on the house. Basically, I paid just $1,500 for this new house.