$200K Equity Sub2 Question

[Curtis H.]

Hello BP, 

I currently live in a home I picked up Sub2 about 2 years ago. The goal was to buy it, live in it while fixing it up with some sweat equity, and sell with no capital gains tax. Find a new place creatively, and do it all again. However, we love the area and now want to stay put. So after renovations and paying down the mortgage, we are sitting on about $200K minimum worth of equity.

I want to tap into the equity using a HELOC and pick up a couple rentals in TX where I have some already. However, in order to get a HELOC I would have to refinance first to get the loan in my name.

Is this a pretty straight forward process? Do I refinance first, then get a HELOC once that's complete?

[Chris Mason]

Originally posted by @Curtis H.:

Thanks Chris.

Would it be a bad idea to refinance with the same lender I'm currently paying? They actually are really good. Curious if others have done this.

 I think the risk there is that once you flag that mortgage as having been part of the whole 'subject to' thing with that lender, which violates the due on sale clause, they will flip their you-know-what and call the note due and payable in full.

The 'subject to' things only continues to work as long as no one explicitly brings it to the attention of the loan servicer, and if they for whatever reason don't notice. If they were to do your refinance, they'd be implicitly acknowledging 'subject to' as legitimate, which no one in my industry wants to do.