Private Lender or Pull Money out of my current property? (Heloc)

5 Replies

Should I use a private money lender or pull money out of my current investment property to use as a down payment to purchase my first commercial multi family (5-10) unit property in Sacramento, Ca? I've just spoken with a lender today and he told me to look into a heloc and pull money out of my currenty investment property, I can easily pull $200,000-$300,000 out of the house. Or should I use a private lender? 

Hey Michael,

How does your cash flow look on your first property after a HELOC? You don't want to get yourself into a situation where you have negative cashflow.

If you have plenty of cashflow on the first property, then use the HELOC to buy the next property. Then refi the new property later and payoff your HELOC.

Thoughts?

Originally posted by @Cameron Tope :

Hey Michael,

How does your cash flow look on your first property after a HELOC? You don't want to get yourself into a situation where you have negative cashflow.

If you have plenty of cashflow on the first property, then use the HELOC to buy the next property. Then refi the new property later and payoff your HELOC.

Thoughts?

That sounds great! Our current property (duplex) cash flows $500 per unit a month, I spoke with the lender who holds my loan and they do not do heloc loans, they do cash out loans. 

I recommend listening to episode #487 from the real estate podcast - skip to about the 4 minute mark. The episode is fresh, only from 10 days ago, and its just David Greene all episode. https://www.biggerpockets.com/...

It's a Q&A where David fields questions from the BP community and gives great answers. Your question is very similar to one of the first questions about HELOC vs. cash out refinance. I hope this helps.