Hey guys - I purchased a rental property two years ago and it recently developed a "slab leak" from a broken sewer pipe underneath the bathroom area of the home. Plumbing plus rehab service has quoted $35K end to end to get the job done which is an ENORMOUS cost given my down payment on the home was $55K. The property is insured but it will take a long time for home insurance company to provide the funds and may not even cover the full amount.
I am considering taking a HELOC on my primary residence to fund the repair on the investment property. Is that something I can do?
What is the best way to fund this super-expensive repair without just writing a check and then, crossing fingers that the insurance company will pay up?
Really appreciate any help you guys can give me here!! Scary stuff to deal with as a first time investor.
Interest rates are still low, this may be the ideal time to refinance before rates start going up again. You have a few options to utilize your properties' equity to finance the cost of rehab, you can do one of the following:
1. Take out a HELOC on your primary residence, although this is only ideal if you plan on paying the money back within a few years (due to the higher interest rates compared to option 2 and 3)
2. Perform a Cash-Out Refinance on your primary residence.
If you don't have enough equity in your primary residence, then you can do either of the following:
3. Perform a Cash-out Refinance on your Rental Property
4. Obtain a Rehab loan on the Investment Property, based on the After Repair Value (ARV).