Today’s guest writer is Houston Neal who works with City Light Financial. He has a few basic ideas for expanding with your investment properties and the financial basics of getting started.

HELOC For Investment Property

There has never been a better time to be a homeowner. From continued performance in the housing market to the availability of online mortgage resources, you now have the upper hand and are in a good position to cash in on the value of your home.

Many homeowners and investors have taken advantage of market performance by taking out a home equity loan to finance other property investments. Specifically, a HELOC or home equity line of credit, provides a way to ‘cash in’ on the value of your home and it allows you to borrow money against home equity.

So why not put your home equity to work? With a home equity line of credit you can use the capital from your home to begin earning returns from two properties instead of one.

Understanding Equity

An important consideration for any homeowner in the home equity loan process, is to understand how to build equity in your home. Equity is simply the difference between your remaining mortgage balance and the value of your property. So, as your property value increases and your mortgage balance is reduced, your home equity increases.

Equity is a significant source of net worth for many homeowners and it continues to provide new sources of revenue. Housing prices have appreciated over the past years and the national market has seen considerable growth. Certainly some states have witnessed greater gains than others and an extreme example is the ongoing increase in California property value. The state jumped 27.18 percent in home value during the third quarter of 2003 alone while the national housing market reported 12.97 percent growth over the same period. Overall, home prices are still up and homeowners have an opportunity to use equity for other investments.

HELOC vs Home Equity Loan

A home equity line of credit is very similar to a home equity loan and shouldn’t be confused for the latter. The main difference between a heloc vs home equity loan or mortgage refinancing is the way you are able to access the line of credit. A home equity loan or closed-end home equity loan differs in that the loan is typically set for a fixed amount of time and a specific amount. Mortgage refinancing is similar and gives you the equity in a single check. A HELOC, on the other hand, provides you with an open-ended line of credit or a revolving line of credit. Similar to a credit card, you are able to borrow an amount whenever you need to as long as that amount does not go over the credit limit. A home equity line of credit only requires you to pay back the amount you borrowed and is a practical and flexible type of mortgage loan.

Overall, a HELOC is a great resource to utilize for investment opportunities and other financial ventures. It helps you establish what you can afford first and provides the opportunity to manage your investment by reducing the line of credit. It can open new sources of revenue and allows you the flexibility you need for investing in property.

Have you ever noticed how many little things never get done because you’re so busy focusing on important things and urgent things? Look around your environment, and you’ll probably find over fifty of these things – e-mail accounts that need cleaned out, pictures that need framed or hung, products that need to be returned, faucets that need repaired… Trying to conquer all of these little chores would be impossible.

Yet finishing a few small tasks might actually boost your attitude.

Every time I see the charm that needs a chain, I get horribly depressed for a moment. I only see the unfinished necklace once a week or so, yet every time, it lowers my mood. There’s one thing I’m not getting taken care of. Why not take fifteen minutes to get a chain and be done with it? Why don’t you take care of your little things. We all know why we don’t. We have a million reasons and a million other things that are more important.

For the next week, I challenge you to start tackling some of these nagging areas that you neglect. Every time you take care of another box of clutter or flush out unused bookmarks on your computer, you’ll get a small boost. It’s a jolt without the caffine. You’ll feel better about yourself and your day. More positive energy feels great. Your mind will feel refreshed and ready to tackle other things… like that net worth.

Can you measure your life beyond your net worth? I’ll be the first to admit that a lot of my transactions revolve around a mental note of how much wealth I want. But what’s the point of more money in your life?

I spent the last week in a hospice in Germany where my husband’s grandmother taught me some great life lessons in her final moments.

1. What’s the point of money if it doesn’t grant you more opportunity and experiences?
My husband’s grandma grew up in Czechoslovakia under communism, which you probably know was a world of black market survival. People who had things to offer like food and medical care were in high demand. You could skip a few bread lines and police punishments if you had something to bribe with. In communism, money meant higher survival. It also meant a chance to escape to the west. Use the resources you are given to create a better life for yourself and others. Don’t steal from the poor; enrich lives.

2. Don’t work for money; let it work for you. Have a reason for wanting money besides just wanting money. After establishing themselves in the west, my husband’s grandparents started with nothing and worked hard to establish a good life. Use money to spoil your guests with the best ice cream, get a good education, own a computer capable of meeting your needs, and travel the world… and not just in five-start, English-speaking countries, for goodness sake!

3. Don’t let anyone else tell you what to do with your money.
Have you ever noticed how many “friends” people who win the lottery have all of a sudden? Everyone has an idea of where your money should go. Some people have your best interest in mind. Most people, of course, have themselves in mind. If you’re working hard with integrity, you have the right to spend your money as you see fit. You have to be smart about your spending and investing, of course. Yet something tells me that if you have worked your way to wealth, you’re going to be smart. Nonetheless…

4. Treat yourself when you’ve earned it, and save and save when you haven’t.
At first, you might think of Dairy Queen treats and French fries. Don’t forget the computers, cell phones, cars, and other fancy upgrades that you “need” and “want”. The media floods us with expectations. How many advertisements tell you that you deserve their product? They don’t even know you! They can’t say what you deserve and what you don’t. Resist the easy ability to dive into debt. It’s hard; you’ve got to try, though. Make smart choices. Live a good life.

Ever wish you were capable of something, thought of all the experts out there, and quickly lost faith in yourself? I know it happens to the best of us. But I also think that the only difference between those experts and our amateur selves is dedication and experience.

When a professional figure skater always falters in a footwork sequence, she keeps working and working until “always falters” becomes “never falters”. I grew up with skating lessons and dreams of the Olympics; I didn’t have the dedication to ever take me to the Olympics, obviously. I found myself practicing the footwork sequences that I could do best because I liked them, I looked good on the ice, and the moves were easier.

Most of us practice the things we’re good at, and we avoid what we’re not good at. We stick with what’s easy and comfortable. As a result, we’re forever average.

Richard Restake quoted in his book, The New Brain,
For the superior performer the goal isn’t just repeating the same thing again and again but achieving higher levels of control over every aspect of their performance. That’s why they don’t find practice boring. Each practice session they are working on doing something better than they did the last time.

What matters isn’t how long you work; it’s how well you work. Did you brush every tooth before bed? Is the math problem correct?

Thinking of all the things we want to be great at is easy. You could probably ramble off a handful right now. What are they?

Then the depressing part… how are you working toward becoming an expert at these things? Sometimes, amateur skill is enough. We’re content where we are. We could make lists and lists of goals, yet when it comes down to doing the things that count, we change our minds or forget.

Block the obstacles in your mind. A local business man sells worldwide tours through the internet. He told me, “If I had known the competition out there, I probably wouldn’t have had the nerve to try this business.” He went from amateur business man to a booming expert, and he’s dedicated to keep working toward his goals of furthering his business. He’s become the expert.