Following up on my last post here. In the spirit of brevity, I'll bullet poi nt my current situtation:
-House hacking a 3-flat in Chicago; the rents pay the mortgage and I profit 40 dollars a month
-If I move out, the building will cash flow about $1000 per month
-Purchased using FHA financing 3 years ago
-Refinanced out of PMI a year ago
-A year ago, the house appraised for 60k over what I paid for it
-Have about 70k in equity now
-Planning on holding onto this property for the cash flow
I want to use FHA financing for my next deal, which I will move into and hack similar to my situation now. Should I use the equity I have in this place and borrow against it to get the down payment on the next property? What are the pitfalls involved in that strategy if any?
Is there a better strategy I'm not considering?
Any questions that will help clarify my situation please ask.
I am currently living in the property. Thanks for the info. I've reached out to Michael.
Get the HELOC as suggested for the maximum. No point in having your money sitting in dead equity and a HELOC is a excellent revolving investment fund.
Sorry to complicate things here guys, but some more to consider before you pull out that HELOC. Sounds like you refinanced out of FHA into conventional and ditched PMI. Well done. To be able to use FHA financing again, you will need to show that you have 25% equity in the property now that you're exiting. You'll also need to have a lease executed with security deposit collected (filling the unit you're leaving) to get the loan approval for the new purchase. If you get the HELOC, sounds like this gets in the way of that plan. Depending on your credit, income, and debt ratios, you might instead look at an unsecured line of credit. Feel free to PM me and I can help you better gauge. If I'm missing something here, let me know!
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