Rental Property Investor · Fremont, CA · Member since 2017 · 125 posts · 75 votes
I have a good amount of equity in my primary residence that I'm thinking about leveraging for passive investments in syndicated deals. Right now I have ~75% equity available to draw. Mortgage payments are pretty low and I'm comfortable drawing another 25% equity to invest with. That would be 50% equity remaining in the property and more or less doubling my mortgage payment.
What type of loan would be best for passive investments? I'm thinking of doing HELOC since I can pull money in and out as they're invested in funds, then pay down the line as the principal is refi'ed out of the deal. A second line is stable rate but there's a high chance I'm paying for funds that I haven't actively invested in.
Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Tony Lin - I believe HELOCs are typically the lowest interest rate loans you will receive on equity in your house. I'd recommend taking a HELOC out and investing in a rental property.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y
Hey Tony, not a bad plan. It's similar to having a 50% 1st mortgage and some cash in the bank to invest passively. Consider getting a HELOC that allows you to convert draws to a HELoan with a fixed rate so that you are not subject to interest rate risk.
"A second line is stable rate but there's a high chance I'm paying for funds that I haven't actively invested in." I do not understand this sentence.
Most syndications are looking for accredited investors...ensure that you understand the definition.
Rental Property Investor · Fremont, CA · Member since 2017 · 125 posts · 75 votes
9y
Thanks for the feedback guys. Yes I am an accredited investor, just looking for extra leverage to do more investments. Hanscom has a pretty good HELOC rate at prime - 0.5% (3.75% effective). Convertible to a 5yr fixed rate at 3.99% or 15yr at 4.99%.