Sell or keep my property a LTR and take out a HELOC?

Question

I could use some experienced advice.

I purchased my first single family home two years ago in Vancouver, WA USA FOR 350k it has since appreciated to a value of ~450k. Its a great starter home built in 2017. The only downfall is the neighbors…they moved in and turned out to be massive hoarders. I currently have the house on the market, we started out at 460k and have since dropped the price twice with no offers. Everyone interested says the neighbors are the turn off. The house has been on the market just over 30 days. The problem I have is that I need to move to Boise, ID for work ASAP. My plan was to sell and use the profits to house hack a duplex, but unless I can sell the house for a solid profit I won’t be able to afford the down payment on a duplex.

I’ve been doing research and talking to real estate professionals about my options and the possibility of keeping the property and using the HELOC to fund a down payment on a multi unit property in Boise while keeping the single family in WA as a long term rental.

I have zero experience with HELOC’s but I’m not sure what my best possible option might be.

Any advice you guys can provide is appreciated!

Stanley Lo · Answer

Just a little info tweek -- 80 LTV on $450K home is $360K.  As you owe $350K, the HELOC line is only 10K.  However, look into Columbia Credit Union and see if they still do 100% LTV for a full 100K line.  I suspect that you might be paying Private Mortgage Insurance.  From recent appreciation, I'm guessing you may have put less than 20% down on your original mortgage.  See if your lender could remove PMI.  I do like the HELOC idea since the cost to sell the house is about 10% of the sale price.  (Excise Tax, realtor commission, and other fees).  Also please do calculate the total payment on the house, 1st mortgage + HELOC and see if the house still cash flows as a rental with property management.  If not, see if you can absorb the shortfall.

Chris Davidson · Answer

@Brandon Pearl HELOC's are pretty simple on the basis you are talking out a line of credit on a portion of the equity in your property. So if you owe 350k and you property appraises for 450k you have 100k in equity. If they loan on 80% LTV you would be able to get a 80k line of credit in this scenario. You would have those funds available but won't be charged on them until you drawl them. At that point you would be required to make the interest payments each month based on the outstanding balance.

One thing to keep in mind is working with your lender and making sure your DTI doesn't get out of wack and your loan not get approved. As long as you let the lender know where funds will be coming from and your plan they should be able to tell you if it will work or not. If you need some lender references for you move to Boise let me know. As for HELOC I would first check with your current lender and see what rates and LTV they can provide before reaching out to others. The rate is important but the LTV is more important. You will need to factor in your HELOC payment along with your mortgage payment as that will be the new true payment to keep from defaulting.

Malcomb Stapel · Answer

@Brandon Pearl  how can you tell the neighbors are hoarders? If it's spilling out onto the front lawn then you should have some options. For instance the city i invest in has a program called See Click Fix. It's a way to take pictures, document, and submit formal complaints about anything from potholes to trash/overgrown yards. That's how the city knows there is a problem. Start looking around on your cities website and see what you can find or who you can call to make the issue known.

Drew Sygit · Answer

What about installing a privacy fence?

Marla Dishongh · Answer

@Brandon Pearl I'd definitely keep the property and rent it out. Work on getting that HELOC, several CU's do 90% or more, First Tech and Columbia CU. Even if you can't quite swing the purchase yet, the rent on your Vancouver home should easily cover your PITI and then you have that HELOC in your pocket to use when you are ready to purchase. If you end up renting for a bit in Boise, that isn't the end of the world, you still have a great investment in Vancouver and you're poised and ready for your next investment.

Lastly, if by chance you purchased the Vancouver home with a FHA or VA loan, see if it is assumable, many are, then be sure to advertise that when you do try to sell. The right buyer could be getting a great rate which could help you sell the home. Just a thought.

Curious what you ended up doing. Boise seemed at the top of it's price climb, did you purchase?

Sell or keep my property a LTR and take out a HELOC?

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