- Marques and Shyra, who blog at Black, Married & Debt Free, own three rental properties.
- They took out a home equity line of credit to pay cash for their first property in 2018.
- Then, they found an out-of state property where homes were cheaper and they could buy in cash.
Couple Shyra and Marques, who blog at Black, Married & Debt Free and don’t share their last name online, have been slowly building a portfolio of rental properties since 2018.
While they now own three rental properties that bring in monthly passive income, their first one required the most unconventional approach.
In order to get their first property, the couple used two strategies to make it possible, and buy it in cash.
1. They paid off their home, and leveraged its equity to get started
Shyra and Marques’ journey started well before they considered real estate investing. It started when they paid off the mortgage on the home they lived in.
“We looked at our situation and we had paid off our home,” said Marques. “We live in California, and our home had some equity in it because the housing market had increased. And so we said, ‘Well, how are we going to get the money for the first house?’ We had some cash saved, but looked at a home equity line of credit.”
These loans, which borrow against the value of a home, are commonly used for renovations or other upkeep costs. But, this couple got creative with the money they were able to access. While using a HELOC can be considered risky —it’s a loan secured by your house as collateral — it’s a strategy that other investors and landlords have used to buy their first properties.
And, in the end, it worked: The HELOC gave this couple enough money to start looking at rental homes and ultimately pay for the first.
2. They were willing to look outside of their area
With that money in hand, they were able to start looking at rental properties. “That afforded us the ability to buy a house in cash in another state where the housing market was a lot cheaper,” Marques said.
Living near Sacramento, California, the prices of potential homes to buy and rent out were more than their HELOC cash could cover. The couple started looking in the southeast US, where homes were more affordable, to buy their first rental property.
They settled on a home outside of Greensboro, North Carolina in March 2018. “There are certain things that we look for because we don’t live in that area. It would be very difficult for us to oversee a big rehab project. We’re looking for move-in ready houses, houses that don’t need a lot of work,” Shyra said.
They focused on areas in the southeast that aren’t prone to extreme weather, reducing the chance that they’d need to make special trips to take care of the property. Then, they built up a network of locals they could rely on, mainly making connections through their real estate agent.
They went on to buy another property in Greensboro, and another in Alabama later. By looking outside of their area, they were able to purchase their property in cash, allowing them to save on mortgage costs. “
“For some people, that can be scary, investing out of state,” said Shyra. “But if you are thoughtful in the way that you approach it, you can definitely make it work and have cash flow.”
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