My family owns a house free and clear in Florida, but we live in NY. Based on Zillow the house is worth 200k. Because my grandfather lives in the house, we cannot sell it, however we would like to use the equity to invest in an income producing property. Is this a good idea? And how would you go about doing this in my situation?
@Louis Aller That idea works, and you can refinance your home and use it to purchase another property. However, I would not rely on the Zillow Estimate to value your home. If you buy a rental, be sure to do your due diligence and that the numbers work to pay your rental.
@Louis Aller HELOCs are a good vehicle to purchase another property I think you should use it to your advantage. Just make sure that since you are investing remotely you have a good team on the ground, especially property management. I don't think grandpa wants you to use his home AND give him a job to do haha.
I agree with @George Makakaufaki that Zillow can be wildly inaccurate. However, if the home is free and clear there should be a usable amount.
Well the investment property would be here in NY, based on the assumption that management would be easier. I plan on waiting until winter when prices seem to decline a bit then placing offers. This also allows me to build some reserves.
But yes, what is the benefit of a HELOC as opposed to just the regular home equity loan for investment purposes? I like the idea of the fixed interest rate after receiving a lump sum so I can budget the debt load as I am still very new at this.