Should I Pull out Equity Now? Or wait and go FHA on next Property?

4 Replies

Question for the BP world.

I am actively looking for my second property to get into and have found a 4-family that would work out very nicely. I'm currently planning to go owner occupied on FHA 3.5% down.

I've been in my first duplex for over a year now (as owner occupied 30 year conventional financing) and believe I've created a significant amount of equity in the home since I've been here.

My question is, should I try and pull out the equity now since I'm still owner occupied and use it for the next couple of rental property purchases, or should I move out of the place now, and go with the FHA loan on the next 4-family?

The reason I'm thinking about pulling out the equity now instead of later, is simply because I'm owner occupied. How big of a difference will it make 2-5 years down the road if I wait to pull out the equity? If I want to pull out the equity, are there conditions that I will have to stay in the current property for 6-12 months? If I have the capital for an FHA loan now, does it make more sense to go FHA on property #2 and get out of property #1, cash flow on property #1 and #2 while I'm owner occupied in property #2, and then use that cash flow for another down payment? Or would I be able to use more leverage by refinancing property #1 now since I'm owner occupied?


Have you considered doing both? Getting a HELOC, as opposed to actually refinancing, while you are an owner occupant of the duplex, and still going FHA on your next purchase? The HELOC can be used in the future for rehab expenses where required.

It is a lot easier, and perfectly legal, to get the HELOC while the home is owner-occupied and then actually draw on it later when the home is not owner occupied.

I was wondering along the same lines. (sorry if I am stealing your thread)

I have a house in Ga that is a rental of mine and I have somewhere in the range of 50K in equity in it, how hard would it be and how much would that jack up my interest rate to get a HELOC on that since it is NOO?

At my credit union, the issue wouldn't be interest rate. They just flat don't do HELOCs on NOO anymore.

You may need to shop around.

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