These days, the real estate market has already gone back up its feet. Using equity for refinancing has been one of the smartest solutions for real estate success. Aaron Chapman who is a 21-year veteran of the finance industry talks about how to use the equity that you have to buy more rentals. He discusses what HELOC is and why he doesn’t advocate using it for down payments on more properties. Aaron also shares his opinion as to when a refinancing rental portfolio does not make sense and gives some tips on how to make good rate of returns.

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Using Your Equity To Buy More Rentals
It's my pleasure to welcome Aaron Chapman to the show. He is a 21-year veteran in the finance industry with a focus on the real estate investor. He has a great team of eleven staff members who help him finance investment loans all over the country. He's been married for over 22 years, has four great children, and has been a volunteer with the local Sheriff's Department Rescue Unit for many years. Aaron, welcome back to the show.

How are you doing, Marco?

I'm doing great. How about you?

I’m doing well. I retired from the Sheriff's Office. I’m no longer participating in the day-to-day rescue stuff. My travel and all the business that has been going on is not a giving me the availability to be there as often as I could. I hated people having to rely on me to be there when I couldn't. I have since retired from that. I have four more people assigned to me directly that are closers and underwriters. My team consists of people from the initial phone call with the real estate investor all the way to check it and cut, including all the processing and underwriting. All that is part of my whole group of people that work very closely together. It's been an exciting couple of months.

I didn't know you made those changes, congratulations. Let's talk about using the equity that you have to buy more rentals. This is of interest to a lot of people and one of the reasons is this. Many of the clients that you and I work with, whether together or separately seem to come from these expensive states. They have properties. Often they have rentals that have a lot of equity in there and they don't know how to tap into that equity. Many times these people, particularly from California, people I call equity-rich and cashflow-poor, have a lot of equity in their principal residence that they're not utilizing. I often refer to that as dead equity or dormant equity. You could turn it into cashflow but it’s sitting there in your residence or in your properties and is generating a rate of return equal to zero. Let's educate our audience a little bit here into the ways that they can do that. Let's talk about the different options available to them in order to tap or strip that equity from their properties. Do you want to comment on that?

I'm going to back you up on one thing you said about the equity itself. Unused equity is useless equity and if you're not putting it to work and doing anything. It's a figment of your imagination until you access it and use it. As far as different ways, I've seen people strip that equity or put it to work mainly through refinance. There's always the 1031. You can always sell, then use 1031 and deploy them into multiple properties. That is one strategy that’s commonly used. The other is doing the refinancing and many people get hung up. Sometimes they’re like,