Seeking advice for using home equity to buy investments

[Mark Roberts]

I'm looking for some advice on how to best use the equity in my primary residence for investments.  Currently I have about $90K in equity on my primary residence and still owe $50K.  I purchased the house a little less than a year ago and have completely remodeled it so I think current value is around $225K.  I've never done a refinance before to pull money out but I'm thinking that might be an option.  I'm looking to get started in buy & hold investments and/or rehabs, any input on which way to go would be greatly appreciated!

[Lynn McGeein]

When we started years ago, instead of cash-out refi, we did a HELOC, then we'd pay cash for the property, fix it up, rent it out, get a loan on that property, and pay back the HELOC, then repeat. We did one flip that way, but found we'd rather stick with buy and hold. Unfortunately, you'll have to research now all the rules on waiting periods as they now have seasoning periods where you can't get a loan (neither can a buyer) on that property for several months or they will only lend up to a certain amount, like what you paid plus actual repairs, etc. Also, they won't use rental income to help qualify for 2 years unless you have established landlord experience, so it will be harder to qualify for the loan if you rent it out. Talk to a lender about the different options. Some people think it is too risky to use money from your primary on investment properties, but it helped us out quite a bit when we started.