If I have equity in my home, should I use it to finance a real estate investment?

When you’re getting started in real estate investing, one of the first realizations most people have is, "You need money to do this." Only, you might not have $20,000 in savings or a rich uncle that can loan you a fortune. So you think, where can I find the capital to buy my first real estate investment? Then it occurs to you: your home.

Maybe you invested all of your savings into a large down payment, your neighborhood has appreciated, or you’ve been diligently paying down the principal over the years. So, you have some equity. Instead of just letting it sit there, you can put it to work for you and buy another real estate investment. But should you go deeper into debt by pulling a second mortgage or equity line?

When you talk about foreclosures, most people automatically assume you’re referring to bank owned properties. But not all foreclosures are owned by banks. Sometimes, a homeowner is unable to negotiate a settlement with the lender, so the property goes to auction in an effort to pay off the liens. As an investor, you can go to these auctions to buy foreclosures and quite possibly walk away with some excellent deals.

Happier people have a better outlook on life, they think the impossible is possible, they dream, they work well with others, and on and on. Let’s face it, happier people simply have more of the qualities that our society values — and in a free-market economy a monetary value is placed on these qualities — a value that’s higher than that of people who do not possess these qualities. Hence, happy people make more and are wealthier.

Wealthy people are more confident, organized, and skilled than others. They’re in control of their lives. When you’re in control, you feel safe, peaceful, and less fearful. You recognize the power of your own agency — you’re doing exactly what you choose to do.

Foreclosure auctions — are they good or bad? Before hunting them down and taking the (considerable) time to attend a foreclosure auction, you should know the advantages and disadvantages. Here they are:

Advantages

Buying foreclosures at auction has only two advantages, but they are biggies: The Bidding Starts Low, Instead of High When you’re buying a foreclosure from the bank, negotiations usually start at the full appraised value and you pressure them to reduce the price. At auctions, the opposite happens. The auction starts at the minimum value (usually, the mortgage balance) and buyers bid the price up.

It’s a subtle difference, but it can have a big effect on the price. You and the other bidders decide what the property is worth, not some appraiser. You might run into a great deal that no one else wants and pick it up for a steal. Or, you might be willing to bid higher than others but still end at a good price. Either way, it’s always easier to go up than down.