I want to purchase my second home using the equity from the first

Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes

I have a Condo with about 72k in equity. I would like to purchase a single family home @ $298 or a duplex at $375 that i really like . What would be my better option to make this purchase. Heloc , Home line ? Not sure if there is a better way . Can some one help me, also i have 20k in saving to add to the down.

Thanks

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Bob Woelfel

Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes

@Juan P Gomez probably isn't enough information here to really know the complete situation, but I agree with the others. I'm not a big fan of newer investors using debt for down payments and taking on more debt. That is a house of cards that can come down quickly if the numbers aren't great or if you aren't capitalized enough. The safest play is to sell and use your equity for a DP on a duplex where the tenant helps cover your mortgage, thus allowing you to save more money. You might be further ahead that way and it's a lot safer play as well. Good luck.

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
Personally, I would sell the condo and then move towards purchasing something else. It depends on your market but I've seen condos perform poorly in many markets, HOA fees get jacked up, they change the rules and hurt your investment, etc.
If that's not an option, I would consider a HELOC.
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Juan P Gomez
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Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes
7y
The Condo is in New York and its a pretty solid market. I understand what your saying though. But in regards with going with a Heloc which i know nothing about, do i have to report to the lender that provides my Heloc that i will use the money for a second home or better yet a second home that is a duplex. Wouldnt the new mortgage company that i will be lending me the money for the second home deny me for using a HELOC?
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
Best option would be to sell the condo. Is it your personal residence or a rental. If a rental what are the numbers to justify holding.
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Juan P Gomez
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Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes
7y
It was my personal but now its a rental property earning 7% cap. I Wouldnt really want to let it go , curious to know why everyone suggests to sell it. My other thing is the second home were i would like to purchase is in Florida which i plan to move to in 6 years.
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Bob Woelfel
Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes
7y
@Juan P Gomez probably isn't enough information here to really know the complete situation, but I agree with the others. I'm not a big fan of newer investors using debt for down payments and taking on more debt. That is a house of cards that can come down quickly if the numbers aren't great or if you aren't capitalized enough. The safest play is to sell and use your equity for a DP on a duplex where the tenant helps cover your mortgage, thus allowing you to save more money. You might be further ahead that way and it's a lot safer play as well. Good luck.
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Juan P Gomez
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Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes
7y
Thank you all for your opinions
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Bill Crow
Investor · Lewisville, TX · Member since 2012 · 106 posts · 103 votes
7y
@Juan P Gomez
You’re saying your cap rate is 7% with current debt. If you cash out (regardless of method), what’s your new numbers look like?
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Juan P Gomez
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Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes
7y
4%
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Juan P Gomez
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Rental Property Investor · Bayside, NY · Member since 2019 · 10 posts · 0 votes
7y
Originally posted by @Bill Crow:

@Juan P Gomez
You’re saying your cap rate is 7% with current debt. If you cash out (regardless of method), what’s your new numbers look like?
4%
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