I am new to real estate investing. Looking for some help.

My parents passed away and left me their house. It is fully paid for and I currently rent it out. Because it was part of their estate, and I am the Executor and Sole Heir, I have not bothered converting the title from their name to mine. The house is appraised at ~$100,000. I would like to either take out a mortgage or a HELOC on this property and use that capital to invest in either other rentals or REITs. I have 2 questions regarding this:

1. Am I going to have to convert the Title over to my name in order to get a Mortgage or HELOC?
2. Do you think it is wise to use hard cash from the HELOC to buy other properties, and then recoup that capital once I finance the new property?

Does that make sense? Thanks - Chris

Also wondering, how much can I expect to borrow against this property? 70%? 80%???

Welcome to Bigger Pockets!

In order to borrow, you will either have to obtain an administrator loan upon opening probate from a private money source (and at presumably higher rates and cost) or complete probate in order to clear title and vest in your name to obtain bank financing.

I have no idea what rates or terms to expect on a non-owner occupied rental. Most HELOC's are variable rate financing and terms cap around 15 or 20 years.

Rather than ask us what is advisable, why don't you learn what makes a deal for you, establish some criteria for your own and decide if having rentals is a good investment model or perhaps another mode (buy/sell, lending, wholesaling, etc.).

I'm always leery when people ask others to make their decisions or provide only generalized info. So that you don't get caught in that trap. Be kind to yourself, give yourself a little break and work on the education part by reading RE books, discussion forums, etc. then you'll know better what avenues are right for your situation.

Rick - I appreciate the input and feedback. It is helpful to gain the perspective of folks who have been successful in the business.

Chris, sorry for the passing of your parents. Regardless of whether you decide to refi or not, you should get the house titled into you or your trust's name - otherwise you are leaving a probate nightmare behind for your heirs should something happen to you.

In addition, this home is now a rental and affords you some tax benefits - I'm not certain if the same benefits are available to an executor that are available to an owner, but I would venture to say your tax strategy would be better served having the home in your name.

Talk to some local lenders and find out what the terms, conditions, pros and cons are to a straight cash out refi vs. a Heloc based on your situation (credit, income, appraised value of home, etc.), and then you can make a more informed decision from there based on your own personal goals.

Most definitely get the title switched. If not you may have never have closed the estate for tax purposes and there possible have to file tax returns. Get it in your name or at least out of your parents.

Originally posted by @Chris Law :

I am new to real estate investing. Looking for some help.

My parents passed away and left me their house. It is fully paid for and I currently rent it out. Because it was part of their estate, and I am the Executor and Sole Heir, I have not bothered converting the title from their name to mine. The house is appraised at ~$100,000. I would like to either take out a mortgage or a HELOC on this property and use that capital to invest in either other rentals or REITs. I have 2 questions regarding this:

1. Am I going to have to convert the Title over to my name in order to get a Mortgage or HELOC?
2. Do you think it is wise to use hard cash from the HELOC to buy other properties, and then recoup that capital once I finance the new property?

Does that make sense?

Thanks -

Chris

@Chris Law ,

1. You most likely will in order to add yourself to the title as you will be liable for the loan.

2. That is a question we can't answer for you. You have to be sure you will be able to earn greater than your interest rate.

Things you need to do: First you need to know Fair Market Value on the date of death. That is extremely important if you'll have it as a rental.

Second, Change the title.

Thanks Steve. I appreciate your advice. Your point in #2 is well taken. I guess I should have asked my question a little differently, though i may still garner the same response.

Is there a best practice for leveraging the equity in my existing property to further grow my real estate investment portfolio?

Chris, I highly recommend you check out the BP Free Beginners Guide. It should help point you in the right direction:

http://www.biggerpockets.com/real-estate-investing

Good luck!