Real Estate Broker · Kill Devil Hills, NC · Member since 2016 · 8 posts · 1 vote
Can I use equity in my current home (265k mortgage vs 400k value) to get a down payment on a vacation rental property.
So I own a home with some equity. I live in a big vacation rental market (75% of homes are vacation rentals). A home is coming up for sale 2 doors down(needs work but I can handle that part easy) for a decent price. How do I talk to a lender about getting this home? its for sale for 295k, would have an ARV of 385k, probably at least 50-60k in work, maybe clear 30-35k a year after expenses and upgrades. What and how do I ask a lender to get a loan on this property. I own a flooring store that I am also an employee of (its an S corp) and make about 90k a year. not sure if that helps. good credit and only payments are a truck that my company pays for 100% and a camper loan on top of my house mortgage.
Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
4y
Hi Jason, lender here! I'm an investor myself and specialize in working with investors. To use equity from your home to acquire the new property you would need to do a cash out refi or HELOC. In your situation I would recommend a cash out refi. Once you have the proceeds you can move forward with getting qualified for the purchase. If DTI, income, etc. are an issue for a conventional qualification, you could go the DSCR or non-QM route where only the asset itself is qualifying you. If you have any questions I'm happy to chat/help. Best of luck, Kristen.
Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
4y
Hi Jason, lender here! I'm an investor myself and specialize in working with investors. To use equity from your home to acquire the new property you would need to do a cash out refi or HELOC. In your situation I would recommend a cash out refi. Once you have the proceeds you can move forward with getting qualified for the purchase. If DTI, income, etc. are an issue for a conventional qualification, you could go the DSCR or non-QM route where only the asset itself is qualifying you. If you have any questions I'm happy to chat/help. Best of luck, Kristen.