M
arques and Shyra, a married couple who blog at Black, Married & Debt Free, aimed to achieve financial freedom. After paying off $33,000 of credit and student loan debt in 2015, they decided to invest in rental properties. In 2018, they used a home equity line of credit (HELOC) to buy their first rental property in cash. This approach allowed them to leverage the equity in their Sacramento condo and negotiate a better purchase price.

    The couple's strategy involved tapping into their primary home's equity to buy their first rental property entirely in cash using a HELOC. They borrowed $120,000 at a 5.5% interest rate, which they felt would give them negotiation power and higher cash flow. A HELOC is a revolving line of credit backed by the homeowner's property, allowing for various uses such as home improvements or debt consolidation.

    After obtaining the HELOC in about 30 days, Marques and Shyra closed on the rental property within two weeks. Buying in cash allowed them to negotiate a better price and complete the transaction quickly. They prioritized making a profit by ensuring their rental income covered both their monthly HELOC payment and additional expenses of homeownership.

    To minimize risk, they focused on buying turnkey homes in growing areas with thriving economies. They also built a reliable out-of-state team to manage their properties, consisting of a property manager, lender, real estate agent, and general contractor. This team gave them peace of mind, allowing them to rarely visit the properties in person.

    The couple used the remaining $16,000 from the HELOC as a down payment on a second rental property, which they bought using a conventional mortgage. They appreciated how smooth the process was and how buying a home with cash gave them leverage and negotiating power. Marques and Shyra have since grown their portfolio to five rentals, generating $28,000 in passive income per year after expenses.