How home equity and credit card bought a 3-bed rental condo

They weren’t even friends and in fact, hardly knew each other at first….A few years ago my wife and I were specializing in hud buy and holds/flips. We showed a 3 bed/2 bath condo to a young couple (perfect manageable rental to start their REI career). Well, when it came time to put in that investor bid, they got cold feet. It’s hard not to get cold feet on your first deal. I mean who hasn’t experienced that! But suddenly we had a problem. The deal happened to fit perfectly into our little real estate portfolio, but we had just emptied our accounts on another property. We couldn’t let this one slip buy to another investor. It just wasn’t right. What to do?! After some thought we decided to tap our entire equity line on our primary residence ($45,000 at the time). Thank goodness we had gone through the trouble to get a Heloc in the first place. You never know when you will need funds for a deal so best to be prepared, get the ammo and let it sit. Not doing so is like fishing without bait, hunting without bullets, you get it right?! Happens all the time though. I see folks do it backwards all day long and when a deal falls in their lap, they’re busy calling their bank, their lender and trying to squeeze money out of every nook and cranny they can find. Back to the deal. We still needed cash and found the rest of the money on a cash advance from our credit cards (at the time the interest was deferred for 6 months). Don’t try this at home if you have bad money habits, but we felt we could pay this cash advance money back before any interest became due (we paid it back in time BTW!). Doing our first cash deal was nice (no lender fees, loan application, requests for docs, copies of essays front the eighth grade etc). We closed, did some basic fix up i.e. appliances, carpet, paint, small plumbing fixes (approximately $3,000 altogether). The lack of three bedroom rentals in the area was a bonus for this little condo. It has always been rented since we bought it (currently rents for $1200 monthly). We took a break from real estate investing after this purchase while we had kids and pursued other careers. However, one thing we did keep doing is look for opportunities to refinance the properties we did have in ways that would improve their performance or enable us to invest in the foreseeable future. We noticed that rates on owner-occupied financing had dropped to 2.875% on a 15-year mortgage with our credit union. The rate on our primary residence was 4.75%. We refinanced that loan including the equity line of 45,000 @ 6.0% into one loan at 2.875%. In one smooth process we were now paying the remainder of what we owed on that little 3-bed condo as part of our new 15-year fixed mortgage at 2.875%. Suddenly both properties were essentially under one loan. They have since lived happily ever after under one loan number. In fact when we closed this loan our Crwdit Union was kind enough to let us know that our home value had increased and offered us another Heloc of 50,000. Time to hit rinse and repeat, but it makes sense to follow your market. Our area property values have skyrocketed giving us a chance to trade the 50K equity line for an equity line of 115K. We plan to leverage these funds into a more affordable cash flow market. The key to your next rental may lie under your own roof!