HELOC to Purchase Triple-Decker In Boston
Hola guys!
I'm a new investor reading, listening, soon to be writing and still learning a whole lot. My mother owns a small house to which she has added a couple of big ticket item improvements. We have not had it appraised since the home was purchased three years ago. I've tried planting the seed of having her ask for a HELOC for the sake of helping me buy my first triple-decker (what we in Boston call a three-family) or at least a two-family in the Boston area. She's weary of the act but IS slowly coming around to the idea (THANK GOD!). I wish I knew a little more about the pros and cons to purchasing a home, specifically a multifamily with a HELOC so as to put it into plain English to ease her trepidation further. I'm also pretty nervous as I do not want to say/do something dumb, as we're BOTH still learning.
Furthermore, one of Boston's burrows is undergoing fierce gentrification. I'm all for it. The burrow is called Jamaica Plain and while it's real estate prices having been steadily increasing over the years, along with neighborhood amenities such as shopping centers, the quality of the population has increased ten-fold and will only continue to crowd out whatever bad apples are still left. This place is the holy grail (seemingly) for landlords thanks to these high-quality renters. If you've ever heard of Boston's Back Bay, they're turning "JP" into it's backyard. Local magazines have even endearingly coined Jamaica Plain "Baby Back Bay" (Lots of yuppies. What landlord doesn't love yuppies, right?). The facts are that while you'll predominantly pay at least 500K for a triple-deckers that's in not-so-great conditions, rents start at around 2K based off proximity to public transit and LOCATION alone. With mortgages being around 3K a month. You can make your typical 50% rule with some ease.
So here's my standpoint... With prices reaching historical heights, my hang up is on three things:
A: Should I keep pushing for that HELOC from Mom and dive in?
B: Should I wait... until this bubble bursts?
C: Use the HELOC to buy in Boston's suburbs and "wait" that way instead?
(I may have just answered my own question, but I still would love to hear what anybody has to say.)