Using Equity in your Home to Purchase an Investment Property

[South Paw]

Just mine. Waiting for the market to crash to buy another..

My neighbors bought 2 more properties recently. But I'm not trying to get caught up or over extended. They make a lot more money than me.

For now, I'm content

Thats dope to live rent free though. Did you have any trouble filling the other side w/ tenants knowing they were going to live next door to their landlord?

Yeah I feel like w/ the spike it would be the worst possible moment right now and wouldnt want to get in a situation where the rent would barely cover the mortgage payment or i was losing money monthly though I'm pretty comfortable I could fill a place quickly since real estate is so hot right now.

gonna spend the next year fixing my credit and researching how to evaluate properties. and I'm still in school right now so I don't think my debt to income would work for approvals until I'm back to work anyways.

 

[OfTheCross]

Thats dope to live rent free though. Did you have any trouble filling the other side w/ tenants knowing they were going to live next door to their landlord?

Yeah I feel like w/ the spike it would be the worst possible moment right now and wouldnt want to get in a situation where the rent would barely cover the mortgage payment or i was losing money monthly though I'm pretty comfortable I could fill a place quickly since real estate is so hot right now.

gonna spend the next year fixing my credit and researching how to evaluate properties. and I'm still in school right now so I don't think my debt to income would work for approvals until I'm back to work anyways.

No problem at all finding tenants. I had the pick of the litter.

I almost bought another property this year too but the math just didn't make sense. We'd be breaking even on it and not making profit.

I've got 2 tenants currently and they're great. Pay weeks in advance most times.

Miami is a good market for that, tho

 

[South Paw]

No problem at all finding tenants. I had the pick of the litter.

I almost bought another property this year too but the math just didn't make sense. We'd be breaking even on it and not making profit.

I've got 2 tenants currently and they're great. Pay weeks in advance most times.

Miami is a good market for that, tho

Yeah Seattle area makes me nervous

 

[BLAZO da GAWD]

Most lenders offer loan products that match FHA terms of 3.5-5% down on a primary residence.

 

[charknicks]

This is what Im talking about. I am in the process of looking for a investment home right now with the equity from my current home.

Trying to strike now while the interest rates are hovering around 3%

 

[charknicks]

I've been doing some research and this seems to be a common method to get into real estate investing. I really want to get into it, and here's my situation. We bought our house 10 years ago on a short sale for 175k, its down to 139k and with the spike we probably have about 300k of equity in it now. Our credit isn't great we've been working to fix it probably in the mid 600s but weve been paying off debt at a really quick pace and will probably have most of it paid off by mid next year can probably hit the 700s next year I believe. I don't know how much that is going to play into it.

We're not really liquid to come up with either the 3.5% down for a down payment for the down payment for a second property or sure what the approvals are going to look like. Has anyone had experience w/ this? I know I want to get everything else paid off first or close to it. I don't know if theres a better way to get into real estate investing in this situation. I know it would be key to analyze a property that would be really profitable and be able to get renters in quickly.

If you have enough equity in your home right now and you arent planning on doing anything else with that space, this is a good idea. First, you gotta see what you can get in a HELOC for your home right now.

This is the best way (in my opinion) to get into the real estate investment game without any liquid money. You just want to really crunch the numbers and make sure you are factoring in the monthly repayment of the HELOC in addition to paying the mortgage of the investment home. It will be higher at first, but as you pay each month, that HELOC payment will be less and less and you will keep more in pocket. Then, you can either pay more each month to knock that HELOC down faster or use some of that to pay yourself and give yourself more liquid space (I would pay down the HELOC to help you open that back up to purchase another property if you can)

Either way, lets talk real numbers in this thread. We are trying to help each other. Good luck to all. Lets get this money

 

[South Paw]

If you have enough equity in your home right now and you arent planning on doing anything else with that space, this is a good idea. First, you gotta see what you can get in a HELOC for your home right now.

This is the best way (in my opinion) to get into the real estate investment game without any liquid money. You just want to really crunch the numbers and make sure you are factoring in the monthly repayment of the HELOC in addition to paying the mortgage of the investment home. It will be higher at first, but as you pay each month, that HELOC payment will be less and less and you will keep more in pocket. Then, you can either pay more each month to knock that HELOC down faster or use some of that to pay yourself and give yourself more liquid space (I would pay down the HELOC to help you open that back up to purchase another property if you can)

Either way, lets talk real numbers in this thread. We are trying to help each other. Good luck to all. Lets get this money

Yeah I really need to get off my ass and go talk to my credit union (BECU) and see what the qualifiers are to see where I'm at. Boeing laid me off last year so I've been full time in school so my debt in income is probably fukked up even though my wife if working. Been trying to get my credit right cuz it got jacked up. I know it would be good to captilize on the rates right now and I know if the market comes down my equity is going to come down.

There is also a trick with HELOC where people have been using them to pay off a 30 year mortgage in 10 years but thats an entirely different topic. I'd rather use it for investment properties honestly.

 

[charknicks]

Yeah I really need to get off my ass and go talk to my credit union (BECU) and see what the qualifiers are to see where I'm at. Boeing laid me off last year so I've been full time in school so my debt in income is probably fukked up even though my wife if working. Been trying to get my credit right cuz it got jacked up. I know it would be good to captilize on the rates right now and I know if the market comes down my equity is going to come down.

There is also a trick with HELOC where people have been using them to pay off a 30 year mortgage in 10 years but thats an entirely different topic. I'd rather use it for investment properties honestly.

The credit unions are much more giving then big banks so thats a good option. And yeah, the best time to get as much equity in the home (and HELOC) is now due to the market values. You will have that amount available to you for the whole HELOC period no matter what happens in the market value.

 

[Swirv]

I've been doing some research and this seems to be a common method to get into real estate investing. I really want to get into it, and here's my situation. We bought our house 10 years ago on a short sale for 175k, its down to 139k and with the spike we probably have about 300k of equity in it now. Our credit isn't great we've been working to fix it probably in the mid 600s but weve been paying off debt at a really quick pace and will probably have most of it paid off by mid next year can probably hit the 700s next year I believe. I don't know how much that is going to play into it.

We're not really liquid to come up with either the 3.5% down for a down payment for the down payment for a second property or sure what the approvals are going to look like. Has anyone had experience w/ this? I know I want to get everything else paid off first or close to it. I don't know if theres a better way to get into real estate investing in this situation. I know it would be key to analyze a property that would be really profitable and be able to get renters in quickly.

Don’t be blinded but the theoretical dollar signs. Being a landlord is not cheap and can get really bad with the wrong mix of tenants. My friend owns 10 buildings and he’s trying to sell everything right now due to constantly having to evict deadbeats. I don’t know how the units look, that can play part I what type of tenants you attract, but he’s losing it mentally.

However, my cousin is having success purchasing buildings with his heloc and he’s happy. Although his vacancy rate is kinda high right now.

Definitely research landlord-tenant law in your state before getting in the landlord business.

I want to flip houses, but I don’t have enough to do it solo and all my friends are scary.

 

[South Paw]

Don’t be blinded but the theoretical dollar signs. Being a landlord is not cheap and can get really bad with the wrong mix of tenants. My friend owns 10 buildings and he’s trying to sell everything right now due to constantly having to evict deadbeats. I don’t know how the units look, that can play part I what type of tenants you attract, but he’s losing it mentally.

However, my cousin is having success purchasing buildings with his heloc and he’s happy. Although his vacancy rate is kinda high right now.

Definitely research landlord-tenant law in your state before getting in the landlord business.

I want to flip houses, but I don’t have enough to do it solo and all my friends are scary.

Yeah I'm trying to do it really slow and do my research. Wait for the market to dip a little. I don't want to make a mistake for sure.

 

[South Paw]

I did go talk to my bank yesterday about getting a HELOC. They did tell me that I will get 80% of my equity but that will depend on credit. If our house is evaluated by them at 350k, but could go as high as 450k, we could get 140k in a HELOC and could go much higher than that. They said really good credit can get you 85% of your equity. Our interest rate will be variable based on credit. Our credit union varies interest rates from 3.8% up to 6.5%. The HELOC is a 10 year that I have to use it in. Our credit is creeping up towards the high 600s but I can use my dad to co-sign and his credit is over 800. The only question in the debt to income which needs to be at 55%. I've been laid off from Boeing doing school so I don't know if my wife's income is enough to reach that qualification would be the only hang up.

 

[South Paw]

Went back and talk to the bank today w/ all my docs. Was trying to get up to the max possible which was 75% of our equity which would of been 230K. Due to credit and everything they came back with only being willing to do 75K but the HELOC isn't approved but in review status. Our debt to income is close but still within the standards so it should be able to get approved I'm hoping. That amount is definitely enough to get started w/ a first rental property especially if we can get an FHA loan. Our current place is FHA but just in my name so I think I may be able to get the rental property in just my wife's name. If not I know there are other loans/financing available where I won't have to put 20% down.

We'll see how it goes.

 

[charknicks]

Went back and talk to the bank today w/ all my docs. Was trying to get up to the max possible which was 75% of our equity which would of been 230K. Due to credit and everything they came back with only being willing to do 75K but the HELOC isn't approved but in review status. Our debt to income is close but still within the standards so it should be able to get approved I'm hoping. That amount is definitely enough to get started w/ a first rental property especially if we can get an FHA loan. Our current place is FHA but just in my name so I think I may be able to get the rental property in just my wife's name. If not I know there are other loans/financing available where I won't have to put 20% down.

We'll see how it goes.

Thats dope. You can still do some good things with 75k in the HELOC. Just remember when you are looking for the rental and crunching numbers that you will need to factor in a monthly payment back on that HELOC. Even with that, you should still be able to find a rental home that you can make money on without having a penny come out of your pocket. Just added monthly income, or use that extra to pay off that HELOC faster so you can purchase another property soon.

Either way, now you have options. Good luck

 

[Ahadi]

1 FHA loan at a time. The rest gotta be conventional.

 

[South Paw]

1 FHA loan at a time. The rest gotta be conventional.

well our current home is my name only. what if we're able to get the rental property in my wife's name, could we do 2 fha at a time that way?

the current home we live in can cash flow 1k per month easy right now. So planning to find a duplex and try to house hack for a year if possible.