Desire To Buy Next Duplex...Need Advice

5 Replies

I have had one duplex for over three years, it is fully rented out with the same tenants.

I saved up a nice emergency fund for repairs for that duplex. (I leaned that here on BP)

The duplex has around 30K in equity.

I would like to purchase another duplex but like many don't have the next 20% laying around. Could/should I take it out of the equity to buy a next one or just be patient and keep saving for the 20%?

There are some desent properties right now in the area I could get for around 80K.

Thanks for any advice

I hear a lot of people on BP going the owner fiance/subject to mortgage route, is that an option? I too would like to invest in a duplex type property, problem is they're pretty rare in Texas. As far as 3 and 4 plexes i've never even heard of those until BP, guess its a up north thing, good luck. 

@Jason Powers  

It sounds like you have a decent cash flow at this time. What would it drop to if you did a cash out refi? Would you still have a positive cash flow and be able to save for emergencies, major repairs, etc? 

@John Thedford

I bought this place back in 2010 with a FHA loan and lived in one side and rented out the other up until five months ago.

The cash flow is good, after mortgage, taxes, ins and all maintenance the cash flow is over a thousand. So yea I would still be able to keep saving for any emergencies and pay for a second loan. But wouldn't have much left for cash flow.

I rent now (live with girlfriend) would it be possible to get another FHA in the same area?

@Jason Powers would you qualify for another loan based on your dti? If so, DEFINITELY buy another duplex and live in half. Owner occupant terms are always better. It is my understanding that FHA is for first-time home buyers and can only be used then, but I look forward to being corrected if I'm wrong about that.
Also if you force equity in this new property and you want to use it, I would suggest securing a HELOC before you move out of it. In my area you can get one from a credit union with no closing costs. Then you can use that to fund part of your next deal.

@Jason Powers  

If you have just 30% equity in your present duplex, you may find you cannot draw out any of it. Most banks will refinance at a 70% LTV, which is where you are now. In some areas HELoCs will be further restricted (here they are 65%).

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