My situation and my next steps

[Travis Dutro]

hello everyone, 

Here is my situation. I bought a home 3 years ago and have been updating it little by little ever since. By March of 2019 I'd like to get it appraised and hope to have 30-40k equity in it. At that point I'll be able to get a HELOC or HEL. At that point I could buy my first rental property;)

The one question I have there is could I use that equity to leverage and use as a 20% down on a 60k mortgage? Or would it even be wise to do that? 

If not then I’d hope to find a home for under 40k with potential to be worth 60k. The market seems to be around 40-70k in nice neighborhoods (c and b) with nice homes that don’t need much of anything. 

There’s quite a few 20k homes here not in the best neighborhood that need probably 10k of work and still wouldn’t rent over 500 a month. At 500 a month there’s no room for cash flow after insurance, taxes, and maintenance. So I’m leaning away from the cheaper homes. Nice 3 bed 1 bath go for 600-800 here.

My only other option if I wanted to start now is to find a seller financed home and borrow around 8k personal loan from bank with 10-12% interest and use 3-5k for down payment. The problem I’m having with that is finding a seller willing enough! 

Any ideas, brainstorming or constructive criticism is appreciated. I’m just a fellow bp member looking to get started with what I have (or don’t have)

Thanks!!

[Rachel H.]

@Travis Dutro Before you do anything with your existing property regarding financing, you may want to check out neighborhoods you want to buy in. Get to know the market. Find areas you like and know which ones you don't like. Know what homes are going for and renting for in the the neighborhoods you want to buy. Don't just look at the numbers but at the neighborhoods as well. Certain types of areas will attract a specific type of clientele. So you'll have to ask yourself if you can work with the type of clientele these neighborhoods attract.  

Once you have an idea of the values in the areas you want to buy in, then you can start lining up your finances. Hope that helps. Good luck!