Use Equity from Out of State Property?

Question

Hello all and thanks for any help you can provide. My husband and I rent out a single family house in Florida worth about $400k, with a mortgage of just under $80k. We would like to purchase a property in Illinois (where we currently live) to either flip or buy & hold--undecided at this time. Are there restrictions against using the cash pulled from a Florida property to purchase something in Illinois? I just don't know the "rules" yet. Thanks!

Pete T. · Answer

just do a cash out refi then use the tax free cash for whatever you want

Susan Michael · Answer

Thanks Jerry. As an example assuming we qualify for a loan, could we not necessarily just pull out $200k, purchase a fix and flip for $150k and use the rest to fix/holding costs until it sold? Would we have to define exactly how the money would be used?

Jerry Tuzil · Answer

susan,

It all depends if your buying it as an investment property and you go conventional you would have to qualify for the loan and the rates are a little higher but not much. Only problem with that is the fix part of the property how bad of condition the property is in to even go conventional and you would have to pay out of pocket for the re-hab. If you buy as investment fix and flip then you have to go hard money or Alt A then the rates would be higher. should not matter whether you are out of state or not we deal with many out of state borrowers. the normal practice is go hard money get the property stabilized quickly and then refinance out to a landlord product if you are buying and holding

Jerry

Susan Michael · Answer

Thanks Gary. It seems like we should be able to use the equity, but not so sure about much higher interest rates or mortgage brokerages that would not be so easy to deal with because we're out of state. Logistics?

Gary Phetteplace · Answer

I am certainly not an expert but if you refinance the Florida home you can use the cash for anything you want. So no there are no rules against what you would like to do.

Hope this helps.