Next Move (financing)

[Dustin Horner]

Hello everyone!

I'm just looking for some quick advice. Currently, I have a single family property that I closed on in early 2024 and am working with a property manager to find renters (was told that this is a somewhat slow time of year in Minnesota due to the weather, but should expect more movement in the coming weeks).

I used a HELOC for the down-payment and a conventional for the other 80%. The HELOC is close to maxed out. If I get the place rented at the amount discussed with the property manager, I'd be basically breaking even.

Obviously, the first order of business is to get the first rental property filled, but I'm wondering how I should go about acquiring the next property. I was turned down for a HELOC with a different lender (a local credit union who would've given me more credit, but determined my current debt-to-income is too high, especially since the rental property isn't generating rent at the moment).

I know that I can do a cash-out refi on the rental property in a couple months. Assuming the property gets rented out and all is going well, should I opt for the cash-out refi to get my next 20% down (and then work with my broker to get the other 80)? I'd like to get into the multi-family space but will obviously need a larger amount of money to get a 20% down-payment for a more expensive property. I was, however, told by my property manager that single-family get rented more quickly in this area.

Any advice is appreciated!

Dustin Horner

[Dustin Horner]

Thank you, @Tim Swierczek. It's true that I may have been misled. My broker told me I should be able to refi in something like 4 and 1/2 to 6 months. However, I agree that it looks like the math will definitely not work to pay of my HELOC and have anything extra.. Perhaps I should wait a year or so or even look into seller financing. I don't currently have any partners.

Dustin