Financing options for starting out

1 Reply

Newbie here - I've saved about 20k and want to start out with REI but i'm finding myself a bit cash poor. Most of the deals I see in my area require larger down payments and additional money after for renovations. I've been looking at financing options and was wondering about the relative merits of each. I have a condo which i've only owned for two years but has appreciated considerable (yay portland!) and I would like to take the equity out and put it to use.

Below is my math for calculating how much I could get with a Cash Out Refi.

Original Loan amount: 132,000
Current Loan balance: 124,951
Est. Current Value: 210,000
LTV w. 210k Appraisal: 59.5%
80% w. 210k Appraisal: 168,000
Total cash out: 43,049


Of course this doesn't include closing costs, appraisals, etc which would probably leave me with 40k total. Would a cash out refinance be worth it for this amount or would I do better to look at a HELOC?

Does a HELOC or refinance impact your financing options later for conventional loans?

Hello Christopher,

Have you thought about investing a little further out of your footprint? I know your prices up North are high and rising, but there may be other opportunities in neighboring cities at much more affordable prices. You of course just have to research and make sure you know learn your numbers for those areas as well.

What would impact your ability to finance more properties conventionally would be your debt to income ratio. So yes, anything that increases your DTI ratio 43%+ limits your chances of conventional financing through an average bank.

Best of luck,

Anthony Beckham

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