3 Replies

I have $100,000.00 to invest .

The property I am looking at is a multi-family dwelling cost about $500,000.00.

If the bank requires 20% down to secure the loan which equates to $100,000.00 I will then no longer have any capital to invest for making future purchases.

My question is – If I buy this property will I be able to transfer the equity of the $100,000.00 in to a secondary property that I would like to purchase.

My goal is to purchase one property per year, hopefully using the original $100,000.00 as equity by transferring the $100,000.00 for a personal loan and then using the same $100,000.00 equity to purchase property after property.

Is this possible to do?

No.  That concept is used when you get seller financing.  The bank isn't going to exchange collateral.  You're best bet is to see if you can get an equity line on this purchase after it's seasoned enough to satisfy the lender.

As our friend @Joe Villeneuve says, "equity is where your cash goes to die." The first idea that crossed my mind with your standard 20% down, finance the balance conventionally is to ask the seller to be in 2nd position for the $100k, and depositing a portion of your $100k in the lending bank as a secured portion of collateral for them that decreases over time. They won't like you having nothing in it, even if they are secured by an 80% LTV. Maybe offer the bank to deposit $50k, allowing you to decrease that amount by $12,500 over four years? If you are in a good marriage, there are more options available to you by separating the borrower and ownership? There should be lots of options for you without having to tie up all of your hard-earned cash!

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