My name is Thomas, myself and my girlfriend Allie are looking to start purchasing rental properties in the SoCal area. We recently bought a house in December of 2017 using an FHA loan with 3.5% down. Total loan amount including closing costs was $318,313. Our current townhome complex has seen significant appreciation sense we have purchased it. Similar units are now selling anywhere from 355,000 - 390,000. There are two units in our complex that are in pre-foreclosure.
I am hoping to get opinions from anyone in this forum regarding sending out mailers to our complex. I'm hoping to get interest from the units that are pre-foreclosures. In this case would a HELOC plus liquid assets be the best way to finance the 20% down that will be required for a traditional loan, or does anyone have any other strategies they have used in the past.
Any and all pointers would be greatly appreciated!!
Before pursuing these condos, check with your HOA if it is ok to have rentals in the complex. There are some HOA's out there that will only allow a certain percentage of units to be rented out and may have some other restrictions in the CC&R's.
As for your question, the "best" way of doing something in real estate is typically subjective, but having a HELOC payment, in addition to the mortgage, taxes, insurance, and HOA dues, just increases the chances of having a less profitable property or one that may not cash flow at all. Check the numbers to make sure you can make money with this method of financing before moving too fast with your pursuit of the condos.
Thanks Bob, that is very helpful!