Taking a HELOC for 2nd home/move-up home (SF Bay Area)
Hi guys, newbie here but I've been watching a few youtube videos and a boss actually recommended the Bigger Pockets PodCast and the world of real estate investment has mesmerized me and I thought I'd pose the question you see in the subject line above, I'm wondering if its feasible to buy a move-up property using a HELOC and renting out my current condo that I live in here in the SF Bay Area.
I figure I'd start small with just renting out my condo and seeing how that goes. But a little about my situation:
I Bought a new 1 bedroom condo in 2012 here in San Jose for $360K. In the 6 years of ownership, the area around it developed and has greatly appreciated. 1 bedrooms currently are selling for around $800-$825K (rough numbers from Redfin/Zillow). Mortgage+HOA is $2000 combined. Local Rentals and new luxury apartments are renting for $3200 a month for something of similar square footage. People renting out their condo in my complex is also around $2800+ being so close to shops like Target and Trader Joe's...and rumors of google moving in next door and being next to a major transportation HUB, the prices are justified here in Silicon Valley.
So my question is, is it a bad idea or is it even possible to obtain a HELOC to obtain a 20% down on a new "move-up" home? While I would ideally like to stay in San Jose but new townhomes start at $950K+ and older homes and even fixer uppers have bidding wars and I just don't want to deal with that for a "move-up" home. While I know people will suggest investing out of state, I am looking for an upgrade property for myself while renting out my Condo because its in such a prime location, I would HATE to sell just so I can buy. I mean, Bart and High Speed Rail is also making its way to where my condo is located.
With that said, I am thinking about moving up to Oakland CA where properties are also appreciating but not as fast as San Francisco or San Jose. A home I am looking at starts at around $759K. I just want to make sure I am not getting in way over my head. It's super risky but thought I'd ask. While people talk about the next big bust coming, this was said on another forum in regards to the SF Bay Area:
"Economic growth here will outpace all other metro areas in the US with the exception of maybe Seattle (which will tie I think). Monopolistic software companies like facebook, google, uber, etc. will suck in revenue from all over the world and funnel that cash into the pockets of bay area landlords. They're now so big and have such powerful network effects, AI & huge data sets, that pretty much nothing can stop them at this point aside from gov't regulation."
So any thoughts and opinions are MUCH appreciated!