Accessing Equity in an Investment Property

3 Replies

Hello Bigger Pockets community! I am looking for some guidance to fund my next deal. I am a relatively new investor. I purchased a duplex as a house hack in July 2019 and my second duplex December 2020, also a house hack. The first was a conventional loan with a large down payment, funded by the sale of a townhome I had owned for over 10 years. The first duplex is cash-flowing nicely, $900 before expenses! The 2nd duplex was funded with an FHA loan with 3.5% down. I currently live in the 2nd duplex and the 2nd unit covers my mortgage. I have the real estate bug and my goal is to purchase two more multi-family units by the end of the year. I am running into a bit of a road block with financing my next multi-family property. I have approximately $175K of equity in the first property and would like to access that equity. Is there another creative way to to access my equity. Thank you in advance for the help!

Lauren 

Lauren, love the house hack strategy. I did it on single unit properties and it works very well and on multifamily properties it works even better in my opinion, which it sounds like you're doing! I used to be a loan officer prior to getting into real estate full time so I understand the debt side of things pretty well. My suggestion would be to try to get a HELOC on a property while you are still living in it. HELOC's are cool because they don't accrue interest unless you draw on it. So it's like a pile of money sitting on your home that you can access at any time, that you'll only pay interest on when you use it. And you don't have to use the whole amount, you can a portion of it and only pay interest on that portion. It's like a very low interest credit card secured to your house. Cash out refi's are good too and rates are incredibly low, however you are paying interest from day 1 after you close on the refi whether you are using the money or not. In 2019 I got a $38k HELOC on the property I live in and it has been great. I've used it for flips primarily funding the renovation. Credit unions are pretty aggressive too. For instance, I got 100% LTV when I did mine. Hope this helps!

Thank you @Tony Angelos and @William Harvey ! I just moved into the most recent duplex and so the first duplex would now be considered an investment loan when I refinance so the rate would rise since the original loan was a primary residence. William, I'd really like to take out a HELOC for all the benefits you mentioned. I'll check with my local credit unions. 100% LTV is crazy HELOC is crazy! Good for you! I appreciate the suggestions!