My name is Brett, I have been a fan of bigger pockets and listen everyday to the bigger pockets podcast and bigger pockets money, absolutely love it. I set a goal for myself to obtain a buy in hold property in one year, did it in 6 months.. We did a complete renovation turned a 1 bed 1 bath in two a 2 bed 1 bath, took it clear to the bones add new electrical, new plumbing, with all the great updates in 8 month turn around. We bought it for $100,000 and gain $80,000 equity once finished. It sits on 1/2 acre and the plan is to do a lot split and move another sfh on the property in the back. Moving forward I recently came across a deal down the road similar deal .47 acre sfh 1bed 1bath asking 140,000 but been on the market for over 70days. I've walked thru it has a lot of potential. 1bed 1bath house. My question is I've done some reading and curious on which loan to go with a personal line, heloc, or commercial? If I were to purchase the house needs a little clean up and new roof that's about it, thoughts were to make it live able to pay the mortgage. Future build two houses or duplex, it is also labeled multi family.
I would like any input and thought thank you
Hi Brett, I would go with a HELOC if you can, it should be easier to get and with lower rates than a commercial loan. Then refinance it once you're finished and move on to the next one!
I appreciate your thoughts what about from a taxes stand point and right offs is a heloc still the way to go instead of a personal line?
@Brett Wells ...Regarding taxes, you're going to have to verify anything i say with someone locally and ideally a professional because i'm in Canada. But generally, any time you borrow money for the purpose of getting a return, it's deductible. The difference between the heloc and the personal line from that perspective is merely the amount of interest that is deducted on your taxes. Naturally the personal line will have a slightly higher deduction simply because it will have a higher rate, but from my perspective, I don't think it's worth taking the higher rate just for the tax savings.
I am not a CPA and do not provide any professional opinion on tax matters. From my personal experience, you can still deduct interest for mortgages and HELOCs for the total principal of up to $750,000. The main difference for you will be the longer application process and higher fees in case with HELOC, but it's well worth it on a long run if you are taking a big loan.