OK BP fam, here is my situation:
3/2 SFH rental that currently rents for $1700/month, but will demand $2100/month beginning 02/01/2019.
I owe 220k.
I can sell tomorrow for 320k on the low side.
***I've considered selling, upping rent, HELOC. Thoughts?***
@Jason D. , Mortgage: $1420/month. So, with rental up to $2100/month, it's positive $680/month minus Cap Ex's.
@Jason D. , Ok, noted. Thanks for the advice. Any preference on where to take the equity? We have other great rentals here, I'm just wrestling with the fact that everything is back on the high end...
@Jason D. , Awesome. Great insight. And for the LOC, that's a conversation with the bank that currently owns my mortgage, correct?
LOC's are fairly cheap. When I did mine it was only $300. You won't get the full 100k, only a percentage of it, I think mine was 70%. I've been having a 45k LOC for over a year now and never used it. Still waiting for the right deal and it's nice knowing you have it in your back pocket.
@Justin Guidry , how long is the LOC good for? Are your plans to use LOC as down payment towards next property I'm assuming? If so, do you use different financing (bank) for the remainder of that next purchase?
I would sell in a heart beat. There is no way I would invest in a property worth $320K with rent at a measly $2100. Your money is not earning it's keep.
@Brandon Graves The LOC is good as long as you own the house. There is a $50 annual charge. I got mine at my local bank were my checking account is.
@Max T. is correct..... His LOC would only be $4,000?? 70% - 320k = 224k - 220k = 4,000
@Thomas S. has a good point. Even at 2,100/mn you aren't hitting the 1% rule.
Was it a primary residence before you started renting it out?
@Justin Guidry , Yes it was primary residence prior to renting it almost 2 years ago.
Just a thought on the equity. It's 100k in equity, but if you sell, it will be much less than that after you deduct fix up costs, real estate commissions, closing costs and capital gains taxes (unless you lived there 2 out of the last 5 years.
Before you decide to sell, you might figure out what your actual net costs will be.
You have a few options and all depends on which route you want to go in your investment career.
Can sell sell and 1031 into a multifamily with better cash flow.
Can heloc and since it is an investment property you can write off the interest on payments and put down payment on next investing property
Can refinance but and pull cash out but most likely won't cash flow unless you raise the rents higher than 2100.
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