Rental Property Investor · Member since 2018 · 1 post · 0 votes
Hello everyone,
I am looking for any input or ideas y’all can throw at me, as I will be completely open here:
I have recently (3 weeks ago) purchased a single family home (rental property) in Akron Ohio for $39900. It appraised at $50,000 (woohoo) so I have built in equity. With 15% down, I currently owe $33915 on it. Which leaves me with $16085 in equity. I would like to take out a line of credit/refinance so I can purchase another unit, if possible. I am however running into roadblocks. All of the lenders I’ve talked to have minimum for lines of credit (10k, or 25k etc), with maximums of 75% - 80% in home value. Recency is a roadblock as well when it comes to refinancing.
Does anyone have any suggestions or ideas of lenders with lower minimums or higher percentages? Or is it simply too soon/not enough equity to be pursuing this?
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
7y
Let's look at the numbers: $50k appraisal x 80% = $40k. You owe about $34K. $6k room for line? Nope, sorry, that doesn't fit into your box.
Let's look at some items outside that box. Use cash, just not your own. Seller financing, partner, hard money on the buy, on and on go the options.
It's the DEAL that makes the money, not the other way around. If you come up with a great deal, let the right folks know about it, you'll have no problem in getting financing.
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
7y
Let's look at the numbers: $50k appraisal x 80% = $40k. You owe about $34K. $6k room for line? Nope, sorry, that doesn't fit into your box.
Let's look at some items outside that box. Use cash, just not your own. Seller financing, partner, hard money on the buy, on and on go the options.
It's the DEAL that makes the money, not the other way around. If you come up with a great deal, let the right folks know about it, you'll have no problem in getting financing.
Investor · Tallmadge, OH · Member since 2014 · 81 posts · 32 votes
7y
Welcome aboard!
Investment property would be capped at 80% from my experience. It would have to be a primary home to get 85-90%. You could wait for it to season (in the right part of Akron) to pull the easy money or touch up the interior and pay $300 for a full appraisal if you think it can pull a higher value.
Then IMO the best option of this type is to shoot for a $100k appraisal. Giving 46k HELOC. Use that to pay cash and refi the second property in 180 days. So that could also season at a (hopefully) higher appraisal of $60k giving you all your money back to pay off the HELOC with a conventional loan.
Problem is time. I'd look for a private loan at a low rate over HELOC. Like interest only...for 12mos and balance due in 12mos.
I.e. Bank of Mom, $50k loan, 300mo interest payment total due $53600. Hold the unused portion back and make a lump sum payment 180-360 days later.
Make it 10% if you wanna keep the math easy. The private loan would be unreported so it wouldn't hit you DTI ratio during refi like a HELOC would.
I am looking for any input or ideas y’all can throw at me, as I will be completely open here:
I have recently (3 weeks ago) purchased a single family home (rental property) in Akron Ohio for $39900. It appraised at $50,000 (woohoo) so I have built in equity. With 15% down, I currently owe $33915 on it. Which leaves me with $16085 in equity. I would like to take out a line of credit/refinance so I can purchase another unit, if possible. I am however running into roadblocks. All of the lenders I’ve talked to have minimum for lines of credit (10k, or 25k etc), with maximums of 75% - 80% in home value. Recency is a roadblock as well when it comes to refinancing.
Does anyone have any suggestions or ideas of lenders with lower minimums or higher percentages? Or is it simply too soon/not enough equity to be pursuing this?
Thank you,
Mike
The amount of money you want to pull out is too small for a refi to make sense. The fees would eat up too much of the actual amount of money available. Leave the financing alone on this property & increase your income to generate enough cash for the next investment. Drive an Uber for awhile if you've got to.