Small Business Owner/Investor · Lehi, UT · Member since 2014 · 33 posts · 11 votes
Hola fellow investors.... have a question, need some advice. Just getting started in this here thing and thought what better way than to use my current primary's equity somehow. Need some advice on best route to go- my plan is to keep the house and rent using equity to build a new place that I can sell in a year. Thoughts?! Thanks in advance
That is how I got started. Most banks will give you a heloc up to 80% LTV, a few will go to 89.9%. If you plan to sell in a year, make it a year and a day (long term capital gains). And be sure to investigate 1031 exchanges if you plan to sell and reinvest.
Scotts Valley, CA · Member since 2018 · 46 posts · 11 votes
7y
Hi Sean -
I'm new to this as well, but just asked myself the same question yesterday. I wouldn't trust another novice, but it's a data point.
Here's what I learned: home equity loans are for a set amount, and you pay against that amount. If you are not sure how much you need, a HELOC is probably a better choice. https://www.fool.com/the-ascent/mortgages/blog/hom...
I called USBank based on this article (https://www.nerdwallet.com/blog/mortgages/best-hel...), asked them a bunch of questions, and was pleased with what I heard. For example, if I understand correctly, no closing costs, they pay for the appraisal, etc.
My personal plan is to go with a HELOC, to BRRRR. I buy a 75% property with hard money, do the renovations, rent and refi. That way, its interest only and on my timeline.
For anyone more seasoned out there, does that make sense?
I did end up getting a HELOC. I called my local title company, and asked them who (a person) was the easiest banker to do business with. Turns out, they were right, the woman at a local bank was really great.
I did have to negotiate the LTV, as I live in California, and the parent company wanted to give me a lower LTV than the 85-90% I could get elsewhere. Self-advocating, negotiating what you want is the #1 thing I've learned from the BP podcast, and it does pay off!
I now have access to the funds, and feel that this has definitely been the right way to go. Haven't landed anything yet, but I can tell you that cash offers will get you closer to great deals.
Stay tuned, turned down today for an offer $50k under asking, but feel upbeat.
Thanks for reaching out, and let me know if there's anything else I can answer.