As of right now, I am positioning all of the cash I have for future investments and cash flowing assets. So to answer that question, you should be thinking about how to take that money out of your house, your personal residence, and invest it in cash-flowing assets.
Why would I do that? Why wouldn't I just keep the equity and then when I sell my house, I have a big chunk of change because you're making a decent amount of money and appreciation on that personal residence? You can do a lot better
If you find good cash flowing assets, you might end up making 10, 12, 15, or even 20% on your money. If you go out and you get a home equity line of credit for 3% on your money, let's call it a hundred thousand dollars in equity, you can pull it all out and pay 3% on that money.
Take that money and invest it in a piece of property. Let's say it's a residential rental property, where you could get a 12% return on your money.
So you pay 3% for your home equity line of credit, but then you find an investment in a residential rental property that will pay you 12% cash on cash return on your investment. Now you're making a 9% return on your money.
So instead of leaving that in your house where you're not going to make the 9%, you're now reinvesting that in an asset, which is going to appreciate.
Lots of times you can do it by yourself, which would be active investing, or you can do passive investing where you call me up and say, "Hey, Murph. I know you're doing real estate investing. Can I get in on anything with you? I have a hundred thousand dollars of a home equity line of credit, and I will love to invest it with you."
But you have to make sure that either I perform or you perform, because if you don't, then that's the risk that you're taking, investing your money. When you become an investor, especially a value-driven investor, there are no guarantees. It's not like you just take the money and you hand it off and you're guaranteed to get a return on your investment. What's the alternative? Leaving it in there and hoping that that money creates wealth for you? Hmm. I'd rather be an active, Value-Driven Investor than sitting on the sidelines.
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