Buy Investment property after paid off primary

[An Nguyen]

Hey,

I have been planning to buy rental property for a long time and it is also my goal to achieve one when I turn 30. But I am still struggling to find relevant strategies.

My current primary house is paid off, its estimated value is around $450k-$500k. I checked HELOC and the most they let me to take out is $228k (probably based on income). I have $50k in saving can use some of it for down payment; $20k aside for closing costs. Fico >800 , no other debts, self employed, income $6-$7k monthly

Plans:

1. I can rent out my house now for $2400/month and use that to support new mortgage if we buy another house $400k-$450k to move in.

2. Using Heloc to buy small property <$300k and spend my owned pocket money to fix it up. Then I will refi to pay back HELOC.

3. And last plan is also the one that I think the most, DSCR with 20%-25% down. I talked to some lenders and they can do with <1 (but of course I need the ratio >1) . By this way, I wont mess with my current house money. And when PPP period is done, I can refi to lower payment.

What would be your advice?

Thanks

[Seth McGathey]

Honestly, right now it sounds like your biggest problem is you have too good of a setup, so you can do almost anything. I think all of your options are fine. You could also consider checking what they would give you for just taking a regular mortgage out on your house instead of a HELOC.

But personally, I lean towards the HELOC. That is a lot of cash you can play with and you get the benefit of time being in your side with a HELOC. Since you pay nothing while it is not being spent, you can sit on it until you find the property you really like.

Other than that, I say start looking for deals and see what deals make the most sense in the area you are thinking of investing, then go from there. 

Best of luck!