How to use primary residentce equity ?
Hello BP,
I have about 200k in equity on my primary residence. Wanted to see some peoples opinions on how I can use that equity to invest in real estate HELOC, Cash out refinance ect. Looking to either flip or purchase a rental property. Thanks in advance for your feedback
Does that $200k represent 10% on a $2m home or 50% on a $400k home? 10% is untouchable and unusable even if you sell (that’ll be your selling / closing costs). 50% will give you some cash to work with.
Quote from @Sergey A. Petrov:
Does that $200k represent 10% on a $2m home or 50% on a $400k home? 10% is untouchable and unusable even if you sell (that’ll be your selling / closing costs). 50% will give you some cash to work with.
Thanks for asking its 50% of a 400k home,
Quote from @Jorge Diez:
Hello BP,
I have about 200k in equity on my primary residence. Wanted to see some peoples opinions on how I can use that equity to invest in real estate HELOC, Cash out refinance ect. Looking to either flip or purchase a rental property. Thanks in advance for your feedback
We just did this recently, only on a smaller scale. We have 70k in equity in our primary residence. We got an HELOC at a local credit union. Used part of the money to make a cash purchase of a home to flip, used another part for all the other cost involved in rehabbing the home, including holding costs. (We also took advantage of the 0% interest on our Lowe's credit card, so that portion didn't come from the interest bearing HELOC) We received 4 offers in 48 hours after listing it for sale. We turned a $50 investment into a $86k house.
That gives you $120k to play with assuming you can finance to 80% LTV (could be 90% if you continue to owner occupy). Reverse engineering that means you have $600k in buying power. What do you want to do and what are comfortable with? Close to hone or ok investing remotely? Self manage or hire? Fixer or turnkey? Short term rental or long term? What are your skills and availability outside of a job if you are currently working a full time job.
that would be the starting point!