You want to know how to use equity in your home, and arguably, so does every other homeowner in the United States. We’ve seen a runup in housing prices that have made homeowners some serious wealth over the past two years. But, are you sitting on a cash flow potential gold mine without even knowing it? I was, and that’s why I started to use my home equity for something better than just appreciation.
Like most rental property investors, I used to look at cash-on-cash return as one of the most important metrics when evaluating a house. While cash-on-cash is still viable to use in today’s market, it barely holds its own against the wealth-building powerhouse that is return-on-equity (ROE). This simple calculation allows you to quickly decide whether or not you should keep, refi, or sell your property so you can build wealth faster.
Have you been using return-on-equity in your rental property calculations? If not, does this metric change how you’d approach buying and selling real estate investments? Let us know in the comments below!
Follow James Dainard:
Heaton Dainard Real Estate:
Intrust Funding: Hard Money Lender