Looking for advice. Cash out refi/ HELOC, or just save?

7 Replies

Looking for advice on best way to go about buying my next investment property. I own a condo which is worth about 160k, and owe 110k. I just purchased a single family residence for my primary residence 3 months ago. I’m looking at buying a property via the Real Wealth Network site, which matches you with a company that provides a turn key investment. The area I’m looking in looks like I would need to come up with about $30k cash. What’s the best way to tap into my investment condo to fund this second property?

@David Cornett

Hi David it never hurts to reach out to bankers, of course. It doesn't sound to me like you're going to have quite enough equity in that condo to get the 30k that you're wanting. Most lenders will want to use a 75% LTV ratio for investment at a minimum. You'll get a little chunk eaten up in refinancing fees, and such as well. What about your primary did you already max out leverage there 80% or so?

Not sure other than that.

I think you either have to save or borrow money from friends or family. If you have a government background, PENFED offers HELOCs on rentals up to 80% LTV. But you can own no more than 3 properties.

Originally posted by @Corby Goade :

HELOC every time. Just make sure your purchase is a good enough deal that you can refi in less than a year and pay off the HELOC. Good luck!

@Corby Goade I am in the same situation as the OP. I have a HELOC available to use for my down payment. Should I let the bank know that is where I plan on obtaining funds for my down payment or should I go ahead and pull out the amount and put in my bank account before applying for financing ? My fear with doing the latter is the fact that a HELOC is looked at like any other revolving line of credit and that would badly impact my DTI...any thoughts?

Originally posted by @David Cornett :

@Slade Harrison curious what your ultimate move was, and how it worked out?

 Hey David, I actually took out a 401k loan with the intention of paying it back using my heloc... haven't done it yet, Because now I'm looking to Maybe use my heloc to purchase another property...