Using Home Equity to Turn His House Into a $5,000/Month Rental

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Sell or rent your home? That’s the decision most Americans have to make whenever they’re upsizing (or downsizing) to meet their new needs. Today’s investor took a (calculated) risk, renovating and upgrading his condo, locking down his first rental property before moving to his new home.

The result? Over $1,000 per month in pure cash flow. No intense strategies, no sketchy loans. Instead of selling, Ryan Johnston used home equity to invest, allowing him to renovate a rental that now brings in $5,000 per month.

Today, we’re sharing exactly where he got his financing from, how he confirmed rental comps before putting the condo up for rent, and how this single investment property is funding his down payment for a much bigger property.

What Is a HELOC (Home Equity Line of Credit)?
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1.Our loan amounts range from a minimum of $15,000 to a maximum of $750,000. For properties located in AK, the minimum loan amount is $25,001 and for properties located in TX, the minimum loan amount is $35,000. Your maximum loan amount may be lower than $750,000, and will ultimately depend on your home value, lien position, credit profile, verified income amount, and equity available at the time of application. We determine home value and resulting equity through independent data sources and automated valuation models or appraisal. Loan amounts above $400,000 are subject to appraisal.

2. The Figure Fixed Rate Home Equity Line is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw.

3. The Figure Variable Rate Home Equity Line is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on the selected rate at application and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the initial draw, plus a stated margin; however, the rate and payment will adjust monthly based on the market and the fluctuation of the Index subject to a Rate Cap and Rate Floor. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. The index can change at any time and the unpaid balance of all draws are subject to the monthly variable rate. Accordingly, variable rates are based on the market and may change after account opening.

00:00 Intro
00:43 Sell or Rent His Condo?
00:43 Figure mention
01:37 Sell or Rent His Condo?
04:30 Finding Rental Comps
05:44 Using Equity to Fund Renovation
09:38 Renovation Budget
10:33 Full Cash Flow Numbers
14:25 When to Sell, Rent, or Rehab