Best way to tap equity to purchase additional properties...

14 Replies

I've got 7 properties with equity that I would like to purchase additional investments with.

What's the best way to so that? Please be specific. What financial product? What terms are available?

How much equity do you have?  What types of properties do you own?  In general, if you have less than 25% equity you'll have a hard time getting any of it out of the properties.  You may be able to get a higher interest line of credit or a 2nd mortgage.  If you have more than 25% equity, then you've got a lot of options.

@Account Closed  

I'm confused.  Reading your profile and given that your company bills itself as an "asset management" company, it seems like you would be the one offering advice on this subject.

@Michael Seeker  

What is the best options you've seen? What specific terms are available?

@Hattie Dizmond  

We're aren't a financing company. We are an investment manager (manage investments).  

@Hattie Dizmond  

We do not provide debt financing.  I can see how the words "Capital Management" might be confusing to you, but that is what we do...manage capital, ours and other investors.

I understand that. But, when you say you help people when "setting up and building" their REI portfolio, I wonder how you can effectively do that, when you don't understand how to access equity within the portfolio. Equity within a portfolio is a form of capital. How can you manage it, if you can't access it. I would seem that knowledge would need to be a core competency.

@Hattie Dizmond  

I'm looking for debt financing that people have used for this. Maybe you miss understood my original post.

@Michael Seeker  

This is a portfolio of SFRs. Yes, I thinking an equity line. 

Thx.

@Hattie Dizmond  

Equity is not a form of capital. It's an ownership interest.

It doesn't become capital until the asset (in this case property) is sold.

You're right.  Equity isn't technically capital.  However, it is "potential capital", kinda like potential energy.  A little shove and that rock hovering on the edge of a cliff has it's potential energy transformed into actual kinetic energy.  So, call it an asset, if you want to deal in semantic, but if it isn't "capital" until the property is sold, then what exactly are you planning to call it when you "tap into it"?  As soon as you strip that equity out, it has become capital, whether you ever sell that property. 

@Hattie Dizmond  

I apologize. I should have been more clear with my question.

You're in Grapevine and many of my properties are in a North Dallas, so if you know of what prevailing terms on equity loans  are in TX are currently, please let me know.

I'd recommend talking to commercial lenders in your area and seeing if you can find any that would be willing to do a blanket loan. Any type of cash-out you go for will require an appraisal. 33% equity is pretty borderline for it even being worth the effort to try to refi unless you can find somebody who will do an 80% LTV cashout loan. Call around to your local banks and chat with them. They'll be happy to tell you what they can do.

@Account Closed  

TX Trust Credit Union offers up to 75% LTV at 4-5 fixed interest but it's only for 15 years.

@Rocky V.  

Thanks!  Exactly what I was looking for.  This might work.

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