Using equity from a primary residence

3 Replies

I am looking to buy a primary residence, do some rehab/add a bedroom and then use the equity in a couple of years to help purchase my first investment property. Any advice on this strategy would be greatly appreciated.

It's hard to give much advice without some numbers, but what you're proposing can certainly be done. My only question would be if you have the money for a rehab on your primary residence, why not just use that to buy a second property? The amount of money required to add a bedroom plus other items is probably pretty significant and could be most if not all of a down payment.

It really is only beneficial if the rehab/ improvements that you do to your primary residence increase the appraised value by more than you spent on the improvements.  Otherwise you will have a difficult time refinancing for much more than the principal you have paid down in mortgage payments.