Investor · Abilene, TX · Member since 2012 · 52 posts · 5 votes
What are best type of loans to seek when trying to acquire more properties for buy and hold or maybe quick wholesale flips? I have a free and clear rental that I pulled a heloc in the amount of 18,500 I owe 7k on and the prop is worth 80k. I came across a property that I negotiated down to 10k and was considering long term hold on it. I want to have my funds squared away so when a property like this comes along I can buy quickly.
Are there any bank institutions that are doing helocs with interest only payment? Wells Fargo advised that they are no longer doing these.
Ideally I'd love to have the equity available to dip into it without having to go through closing each and every time that I want to add to the loan.
This site is amazing and I can never repay everyone for all of their help/ support.
Lender · Plano, TX · Member since 2013 · 312 posts · 71 votes
12y
Jesus, I am a lender in Texas. I would do a cash out while rates are low. I can finance up to 75% on your investment property which will give you about $60k to work with. No pre-payment penalty.
Real Estate Agent · Metro Detroit, MI · Member since 2010 · 13 posts · 0 votes
12y
A cash out transaction is a lump sum of money that you would receive. The interest rate will vary depending on which day you lock in. Based on an investment property and your mortgage size, you should be in the 5.125%-5.5% range on a 30 year fixed.
Investor · Lafayette/Baton Rouge, LA · Member since 2013 · 1k+ posts · 915 votes
12y
@Jesus Villarreal , a HELOC is a Home Equity Line Of Credit, that you can use and pay back in smaller increments or all at once. A cash out refinance is refinancing the property and getting cash for your equity up to the lender's limit. @Joseph Pytcher gave you a good example above. It's not likely that you'll get a 30 year loan, though. More like 20 years.
I think this is a pretty smart way to reinvest in buy and hold properties. You get access to your equity without creating a taxable event (like if you sold). You can redeploy your capital into more properties and your money isn't "tied up" in the property you own already. And your renter is paying down your loan and you are regaining your equity by about 3% in the first year and an increasing percentage every year after that.
I would talk to a local or regional bank and deal with their commercial loan officer. Your credit score will be a factor when you first get started, but becomes less of a factor as you establish your business' credibility and creditworthiness.