Chicago, IL · Member since 2014 · 49 posts · 7 votes
I plan on using leverage from my current property to invest in my next project. I have about $100K (possibly up to $130K) that I can access through a HELOC loan. I have a few ideas on how to get the ball rolling with this, but would like to hear others ideas on how I can use this to invest on a flip in Chicago.
We have many excellent projects in contract we're closing on. We have buyers in contract for the improved properties most of the time by the time we acquire the properties. We could explore JV'ing with you for a quick flip and excellent returns.
We have many excellent projects in contract we're closing on. We have buyers in contract for the improved properties most of the time by the time we acquire the properties. We could explore JV'ing with you for a quick flip and excellent returns.
HELOC loans are generally given on a primary residence. If this is also your situation, then I strongly discourage this strategy. If your deal goes sour and you default on your loan, you could lose your home to foreclosure. Why not use conventional financing with the target property as collateral for the loan? That way, your primary residence is not at risk.
@Dave Toelkes this is my primary residence, I am house hacking so I rent the 2nd floor and live in the first. Conventional financing is not an option for me since I just bought my current residence 2.5yrs ago and still owe around $150K (unless you know a way to use conventional financing while already having a home loan?)
I plan on using leverage from my current property to invest in my next project. I have about $100K (possibly up to $130K) that I can access through a HELOC loan. I have a few ideas on how to get the ball rolling with this, but would like to hear others ideas on how I can use this to invest on a flip in Chicago.
By flip I assume you mean a property you will own for a short period, renovate then sell for a profit. My recommendation: Properties that are flip candidates usually don't qualify for conventional financing so consider getting pre-qualified for a private and/or Hard Money Loan, then use your HELOC to fill the gap between what you qualify for & what you really need for a deal. You'll be able to do more deals this way & spread the HELOC amoung multiple projects. Use the HELOC for your down payment/monthly payments & potential project surprises.
While the cost of hard money will be more than your HELOC, you'll be able to do multiple projects in lieu of one w/ just your HELOC.
There is no rule against having more than one financed property. I believe current Fannie Mae rules allow conventional financing for up to four properties.
You can get up to 10 conventional loans, as long as your DTI's and reserves, etc are met.
Instead of a HELOC with such a large amount of money at an adjustable rate, why not do a cash out refinance and use that as down payments for more purchases? Since you have a mortgage history, you can count 75% of the potential rental income, on the future purchases.