600k in equity, need advice
A close family member just had their home appraised and it came back 855k. They have 600k in equity. I am relatively new in my real estate journey and my family member has no experience other than renting 2 ADUs on the appraised property. I currently have a 4plex that I got with the VA loan that I am house hacking. My plan was to use the rest of my VA eligibility to get another small multi family next. My family member wants to get into real estate and is open to lending or partnering with me. Should they HELOC or cash out refi? Feels like there is a big opportunity here. Neither of us want to waste it. Ideas/advice would be great.
I like helocs on primary residence because it is designed for short term use and the payment gets allocated to a project that will make money in 6 - 12 months.
imagine if they did a deal with you, and after 12 months or so you refi or sell that deal and the family member gets their 600k back. Now what do they do with it? Their payment on their house went from $1500 to $7000 and even if they pay down the mortgage some, they still have a giant payment.
I agree with @Allan Smith, a HELOC is a better option for your family member.
They should call around and see what their options are though. They have $600k in equity, but they may only be able to tap into $400k of that equity based on the banks max CLTV guidelines.
That's still plenty of money to put into a deal. Plus they will only need to make a payment when the money is checked out and being actively used on that deal.
