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 tomorrow's video.