Rental Property Investor · Greenville, MI · Member since 2018 · 36 posts · 9 votes
I want to run a strategy by you.
I have one single family rental and one single family home, each with a bit of equity. I’m thinking of
1) tapping into the equity via two HELOCs(one of each property) to purchase a third property. Then
2) Upon purchasing the third property, taking out a third HELOC on the purchase price of that property to fund the rehab to bring it up to its proper ARV. And then
3) Upon rehabbing, rent it out and finance it with a conventional mtg large enough to pay off all three HELOCs before any adjustable rates are hiked. And finally
4) repeating the process using one or more HELOCs on any of the three propertys
It seems speculative, but is ultimately and completely dependent on the numbers of the deal. Has anyone tried something similar?
First things first - HELOCs are not commonly available on investment properties. The main vehicle to pull equity out of an investment property are through a cash out refinance.
Next, I didn't follow all the steps you listed but I'd be extra careful about executing any strategy where at any point, success depends on closing your financing.
Financing is best utilized when you don't NEED it.
Rental Property Investor · Greenville, MI · Member since 2018 · 36 posts · 9 votes
7y
Thanks for the feedback, Jim. I'm curious if you have ever called around to find a HELOC for an investment property. So far I've called only two banks. The first was a local bank that doesn't offer them and the second was a national bank that does. I'm going to call several more before applying for one, because I'd like to get the best terms possible.
I love the statement “financing is best utilized when you don’t NEED it.” Can you share an illustration of this?