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The five ways real estate pays you, your monthly cash flow and using HELOCs are three listener questions that I answer today. Home inventory is so low that machine learning and artificial intelligence are being used to predict when someone is likely to sell. ATTOM Data’s Daren Blomquist tells us where today’s housing values are compared to pre-recession peaks. Want more wealth? 1) Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2) Actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 00:57 How would $1,500 monthly cash flow help me? 04:00 The “5 Ways” real estate pays you. 06:40 HELOCs. 26:16 Daren Blomquist interview begins. 29:00 Machine learning, artificial intelligence in real estate. 35:00 Higher mortgage interest rates = higher home prices. 38:18 National median housing prices vs. “pre-crash” highs. 40:30 Housing values in “stable” markets. 43:38 Get Rich Education TV. Resources Mentioned: www.attomdata.com Get Rich Education TV: GetRichEducation.tv Mortgage Loans: RidgeLendingGroup.com Cash Flow Banking: ProducersWealth.com Apartment Investor Mastery: BradSumrok.com Turnkey RE: NoradaRealEstate.com Find Properties: GREturnkey.com GRE Book: GetRichEducation.com/Book Education: GetRichEducation.com   Hey, welcome in to Get Rich Education, Episode 198. I’m your host Keith Weinhold and I’m going to answer a few listener questions today… ...about your cash flow, your total rate of return, and finally, Home Equity Lines Of Credit. Then we’re going to have one of the top real estate trend trackers in the nation join us here later. Let’s get right into it. Ellis from Gastonia, North Carolina asks, “Keith, Episode 188 had a great breakdown of how run you all of the numbers on an income property. The thing I’m wondering about is that your example only resulted in a positive cash flow of $150 on that property. With the maximum of 10 conforming loans that we can get, that’s only $1,500 in monthly cash flow. How would that be enough for us to leave our job?” Thanks, Ellis. And, of course, not everyone that listens here wants to have their passive real estate income replace their passive job income. Though many do. ...and it’s not a get rich quick thing...it’s about incrementally building up durable cash flow streams over years. Well, Ellis, and I’m not sure how many shows you’ve listened to. That example of the $150 cash flow was just for one SFH - and really for one of the lower-cost ones - the purchase price on that was 70-some thousand dollars. It was in Memphis. So most of the income properties you buy will have a higher purchase price, higher figures, and often a higher cash flow. Really, $1,500 with ten properties would be about as low as a projected number could possibly get. So Ellis, if you’re married, both you and your spouse - you each qualify for 10 one-to-four unit properties...20 total and BTW… ...you want to put those in your individual names. If both you and your wife were on the loan, that would count as a strike against each of your limit of 10, so as you buy, alternate back-and-forth - you own the first one, she owns the second, you own the third, and so on, or something like that. So that’s 20 doors minimum there - or I guess 19 since your primary residence is part of that formula, plus if you have some duplexes or four-plexes in there, that might be 25 or 30 or 40 doors. So, there’s so many reasons why you would likely have substantially more than $1,500 in passive monthly cash flow. Then there are financing programs beyond conventional ones, you might also have some 5+ unit apartment buildings, some agricultural parcels or a mobile home community, or maybe you even got a couple low-cost properties paid-off and don’t think it’s worth getting a loan for tiny amounts, so they produce cash flow although there’s no loan there… ...there are a ton of reasons why it would be way more than $1,500. Thank you for the question, Ellis.  ...And another important thing to remember there is that we’re only talking about cash flow - which is only one of five simultaneous profit centers that you typically have. But cash flow is a key profit center because it’s the most liquid one. Jessy from Sacramento, CA says, I love your show. It’s flipped my financial mindset totally upside-down, changed my family’s life, and changed what I thought was possible for us.  Part of what I love hearing about is that 5 Ways You’re Paid in real estate. Ah - then he (or she?) shows me an example here in the question of 30% for leveraged appreciation + 6% cash flow , 5% loan paydown, 4% tax benefits, 3% inflation-hedging = a total return of 48%.   Yes, those are the five ways that real estate investors often have as profit centers.   The question Jessy asks about this is: “Though I get my properties from GREturnkey.com and these returns seem about right, I don’t think I’m invested in any one market that performs this way.”   OK, I love that question, Jessy. Few individual markets are going to perform just that way.   It’s a blended portfolio approach. For example, on your new purchase in Dallas-Fort Worth, you might not have any cash flow any more. It might be cash flow zero. That’s just the way DFW behaves now.   But it’s likely that you’ve been achieving better than 6% appreciation there in DFW (and I’m referencing that 6% appreciation at 5:1 leverage as the 30% Jessy gave in the example).   Then if you’ve also bought in Memphis, you’re likely achieving less-than-average appreciation - that’s just how many areas in Memphis behave, but you’re getting above-average cash flow.   So it’s the blended portfolio approach that can lead to “Year One” returns like what I’ve described with the “Five Ways That You’re Paid”. Multiple markets means you’re more diversified at the same time.   One market, however, that’s performed lately with a nearly equal measure of both appreciation and cash flow are some of the Orlando and Tampa Bay submarkets...so some markets will come close - most won’t - they’ll be weighted differently across your five profit centers.   Thanks for the question, Jessy.   The next question comes from Michael in Astoria, Oregon. Astoria is beautiful. One day, I went to the top of the Astoria column there - it’s a tower overlooking the mouth of the Columbia River.   Michael says, “There aren’t any cash flow markets out here on the west coast and we have substantial equity in our $1 million Astoria home.   We still owe $504,000 on the loan so it’s about half-paid off.   From listening to you and understanding that the Return From Home Equity is always zero, I also know that our leverage ratio has been cut to 2-to-1.   What’s the best way of removing our home equity to use for down payments on cash-flowing income property?”     Well, thanks for the question, Michael. First of all, you need to decide for yourself that that’s what you want to do with your home equity.   Understand that doing so means that none of your equity is lost - it is merely transferred into multiple properties - and it also can produce a cash flow for you now.   Of course, though the return from home equity is always zero, borrowing against your home equity incurs an interest rate expense that you need to beat.   I’ve removed equity from my property with a HELOC for buying more investment property...and let’s drill down and unpackage a HELOC here - H.e.l.o.c. - Home Equity Line Of Credit.   Let’s talk about why you would use one, how it works, and both your advantages and your risks here, Michael.   With a HELOC - if you understand how a CC works, you largely understand how a HELOC works, except your credit limit is based on how much equity you have in your home. You can usually borrow up to an 80% combined LTV ratio.   So what’s 80% combined LTV really mean?   Now with your home, let’s just round your million-dollar home’s mortgage loan balance to 500K. This means that you could potentially borrow up to $800K total - you’ve already got a $500K lien on the property, meaning you could get a HELOC for another $300K.   Yes, with $300K, you could potentially put $30K into ten low-cost income properties in the Midwest and South - down payment & closing costs. Now you’ve spread your risk around because you’re invested in multiple RE markets.   Now to qualify for a HELOC, you'll need to document your income and employment status just like you would if you were refinancing your home, Michael.   People often use HELOCs for home repairs, sometimes they’re used to pay down higher interest rate CCs. But you can use the funds for anything - a trip to France, a new fishing boat.   The HELOC is essentially a second mortgage for you.   Like a credit card, homeowners can borrow or draw money on multiple occasions, usually for a period of 5-10 years, and up to a maximum amount - it would be $300K for you in this case, Michael.   There are two time phases with a HELOC. The first one is your Draw Period, which typically lasts 5-10 years. The second one is your Repayment Period - which can last about 10 years, maybe even up to 20 years.   Now the first one, your HELOC Draw Period is a really nice time. Now you’ve got access to $300K, and you only need to make interest-only payments on it - which means you have flexibility - you can make principal payments on it if you want, but you only need to pay the interest portion monthly.   And your HELOC balance can be very elastic - like a credit card - you could just borrow out $150K on your $300K line right away, make extra principal payments to get it down to $120K after a few months, then months later, run it all the way up to the limit of $300K, and years later pay it back down to “0” again.   It’s a pretty great time for you - you’re enjoying what feels like a windfall of cash and you only need to make the interest-only payments.   But after this 5-10 year Draw period, the second of your two HELOC time p