What’s up my friend? Kris Krohn here and
today, we’re talking about home equity lines of credit. Getting one might be
literally the worst decision of your life. But it also might be the best
decision of your life. And for some of you, I’m going to show you at the end of
this video how you use it as a tool to make millions of dollars. So today, we’re talking home equity lines
of credit. And for those of you that don’t know exactly what that means,
here’s where we’re at. We’re going to do an example of a property. And we’re going to
say that this home has a value of $300,000. But here’s what’s owed on it.
Roughly a third. So, what’s owed is $100,000. Now, you could actually go to
the bank and the bank would say, “Man, you’ve got so much equity in this house
because 100,000 is your mortgage left of what’s owed. But between
100 and 300, that my friend is $200,000 of equity. And a bank says since your
home is almost paid off, we’re comfortable giving some of that equity
to you. It’ll actually put it on a credit card, they’ll give it to you with
checkbook control. Which is pretty awesome.
And a bank will often allow you to use up to sometimes 90% of the value. Could
be 80%, some banks 85 some 90 percent. 90% of that is 270,000. That would be a home equity line of $170,000. Today, we’re having a conversation about is a home equity line
of credit a good idea or a bad idea? I want to tell you something right now. If
you don’t have a business plan or if you’re not an investor or if you
wouldn’t use that money responsibly, then getting a home equity line of credit, if
your goal is to pay off your house is a nightmare. That’s a bad decision. You
might blow it on a boat. You might put it on a car. You might get in the habit of
just every month 500 extra dollars going on to your home equity
line. And all of a sudden what happens is instead of getting your house paid off,
you’re actually loading it up based on consumer debt stuff that actually
doesn’t pay you money. However, if you said Kris, I want to use my home equity
line of credit to make me money. Well, funny thing is a debt can be good and a
debt can be bad. When you produce a debt because you’re consuming something and
you lose money on it, that’s bad. You want to stay out of that as much as possible.
Rule number 1, don’t lose money. But if you’re using your home equity line of
credit to be able to buy businesses or to buy homes or real estate investments,
they’re actually going to make you money, then all the sudden this debt is a good
debt. You’ve taken the weapon and you’ve turned it into a sort of financial
freedom. Okay, so I want you to understand that the goal is to get a house paid off.
That’s at least what a lot of people think the goal is. I want to tell you
something though that we do very backwards in our society. Do you know
when it’s time to pay off a house? Oh, you didn’t know that sequence matter, did you?
Most people think that if you have a debt, you should do everything in your
power to pay it off. That my friend is not always true. You actually have to
look at when it makes sense with positive arbitrage and what it doesn’t.
So for example, if your goal was I want to pay off this house and I’ve been
paying it off for 20 years and I only have ten more years left and then
I’ll have the last hundred grand paid, off, you’re feeling pretty excited. Don’t
get a home equity line of credit, it’ll screw things up. Check this out.
Let’s say that you used $40,000 from your home equity line to buy an
investment property. By the way, I do this with people all over the world.
This is pretty cool stuff. I’ve been doing this on nearly a billion dollars
worth of real estate. So, I’m going to take 40,000 from my home equity
line. Let’s say that that represents this much right here. And it’s going to actually
increase your payment. Let’s say it increases your payment by $300.
But you take this $40,000, you put it in a piece of property that is
now paying you, let’s just say $400 a month. Can the 400 pay the 300? Yes.
There’s $100 leftover. Does that mean on average that your $100 a month better
off? It does. But that’s not the real win. You see this $40,000 in 5 years based
on the way I do my real estate, I sell this house. And let’s say I just double
my money. Let’s say I make $80,000. What can I do now?
I can wipe out the debt and what do I have left over now? I paid the 40 grand
back I had $40,000 left over. What can I do with that 40 grand? I can now put it
in another house. Here’s a different way of looking at it. You could actually max
that strategy out and you could say, “Kris, are you telling me that I could
take that 170,000?” And let’s say buy 3 homes. And then
turn them into 6 homes. And when I sew off those 6 homes, let’s just say for
all intents and purposes that you’ve turned 120,000 into $240,000. Well, you pay off 120 that you borrowed, can
you pay off the rest of your 100,000 balance now? The answer is yes.
And you have money left over. So, using your home equity line to make money can
actually be an accelerant. This is what I do with a lot of my business partners.
Literally people will find me from all over YouTube, they’ll watch hundreds of
my videos. They’ll see my track record on thousands of homes. And they’ll say, “Kris,
you have a system to work with me wherever you are in the world and
partner up together and actually deploy your assets to build a rapid growing
portfolio with some of the best deals in America.” That’s what I do with people. At
least with some people. I mean I have standards. So not everyone makes a good
partner. But if you want to explore that and learn what that is or how you could
partner with others, then there’s a link below. Go ahead and click the link and
then just go ahead and learn from me and my team what that would look like.
Because your equity might be what’s going to save your bacon and retirement.
Your equity or your 401k for that matter or your IRA for that matter, those become
some of the best investment funding sources. So that instead of earning 3 4 5
percent like your bank account of bricks here. When you retire, if your house paid
off, you can’t eat bricks. You need money. Which means having paid off anything is
a level of security. But having things paid off and a residual income is a
higher level of security and that’s really what the goal here is. That’s what
the intention is, is to put you in a place where you don’t have to sell off
your house and downsize and eliminate all those amazing memories because you
didn’t properly prepare. Home equity line. Is it a good idea? If you’re going to use it
for a good reason, if you’re going to use it to give yourself a chance to financially
grow, then it’s a fantastic idea. For anything different, it’s probably a bad
idea. Hey, thank you so much for watching this video. I hope this was useful for
you. I hope it was helpful. You can pick up a copy of my book down below in the
link. It’s free, you don’t have to pay for it. Just cover the shipping. And I’m going to
share with you how you can use the equity in your home and literally turn
it into millions of dollars. You’ll also find a link below for what it might look
like for you and I to partner up together. Take you into the best markets and crush it
in real estate because timing is perfect right now. Subscribe, we’ll see on