I am new to real estate investment.
I recently closed on foreclosed property that required me to buy property on cash. I bought this property with 30K cash. Initial repairing expense is 5K. I am hoping to get tenant in month or so.
There are few other good deals out there but i dont have cash at hand and those properties are in lower 20Ks so its not worth buying those properties on finance.
My question is that how do i get my cash out from my rental property that is worth 40K /45K .
IS there a lender that will refinance the original property in your area? Most refi loans will be at between 70-80% of the ARV. If the property you are rehabbing is worth 40k, then even a 70% rehab will get you 28k...which would be enough for your next property.
The problem is finding a lender that will write a loan for less than 50k. Keep looking until you find one.
The alternative would be to take on a partner on the first property. Just sell half of it for the amount you need for the second property.
Can you get a HELOC or refinance it into a loan? Lots of options but shop around!
Congrats on your house :)
@Pratik Desai Several options.
1. You can carry a promissory note on your property. Using your first property as a collateral.
2. A home equity line of credit will let you get the money out. HELOC will have higher interest rate.
3. Cash out refinance into a loan. This will get you a lower interest rate.
Thank you for the advise.
I am thinking of HELOC but banks that i contacted suggested either they dont do HELOC for investment property and some of them required appraisal and will do only commerical credit line.
Refinance for a 40K investment property is not looking very cost effective but that is an option that i am keeping it open.
Promissary note on my property that something i did not explore. Thank you for the suggestion.
I'm about to do this on Tuesday. Bought my first property cash and using it as collateral for the second property that will be financed 100% including repairs.
Bought first property for 17,500, put 6500 into it. Buying second property for 36,000 and putting 19,000 into it. My private lender leaned both properties for $55,000 interest only loan at 8 1/2% for five months minimum.
Solid deal for me.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.