HELOC & then Cash Out Refi???

Question

I’ve been saving cash to start my BRRRR project my Family wants a pool built. Our primary home had accumulated at least $50k of equity in 9 month (From $248k to $307k). My question is, if I tap into my equity through HELOC to build a pool in our backyard ($60k to build), then appraise the house after pool build (approx $400k comps), how soon can I Refinance our house? I want to cash out some equity to begin my first project after the pool project. Any constructive input is appreciated.

Rommel

Marson Maynor · Answer

Hello Rommel!

A HELOC may be accessible up to 85% Loan-to-Value(LTV). Assuming your home appraises for $307,000... 85% LTV = $260,950. Subtract your current mortgage balance and that would be the estimated amount available to borrow.

Andrew Postell · Answer

@Rommel Rosales if I'm tracking this correctly, you are saying that you can build a $60k pool and gain $100k in equity - do I have that right?

Rommel R. · Answer

Hi Marson,

Thanks for such detailed explanation. I do plan on tapping into what ever equity that is available just incase my fund runs short. Question: How soon can I Cash out Refi (Assuming there's a marginal equity built) after the home improvement is complete using HELOC. Thanks in advance!

Rommel

Rommel R. · Answer

Hi Brent, Absolutely Family always comes first! I understand I can only get 85% at the most LTV for HELOC, I guess what I am trying to figure out with this post is to find the answer to my main question: How soon, can I cash out refi a home after home improvement using a HELOC? I now realized, I probably should've left out the story about building a pool! ha!

Rommel

Rommel R. · Answer

Hi Andrew, based on current home equity and the comparable homes with pools it may be close to $100K. My goal is just to get that $60K back after refi. I guess my main question in this post is >How soon can I refi the home after the pool build is complete using HELOC?

Brent Coombs · Answer

@Rommel Rosales, at this rate, it looks like your family may continue to be prioritized over your BRRRR ambitions. Many times, a pool becomes a liability rather than an asset.

This time a pool, next a new safe (read: expensive) car, then a much deserved cruise...

Lifestyle choices can smother otherwise good intentions to become an investor.

[I'm not suggesting you sacrifice lifestyle; just continue with what's really important].

Note: $50k theoretical increase in equity does not translate into $50k extra borrowability.

Using Marson's formula above, how much borrowability does result?  Good luck...

HELOC & then Cash Out Refi???

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