I am looking for advice on a HELOC or cash out refinance options that may work on a recent flip house we completed. It is currently on the market and we are actively trying to sell it for $459K. However, we recently advertised it for rent and have gotten an overwhelming response. If we do decide to rent it, this is what the numbers would look like:
- Rental income of $1,950/month plus utilities
- Our monthly mortgage is $549.51
- We hold a mortgage of $161,750 at local bank
- We still owe back family members $142,788 in outstanding loans to get through renovations
- We have $68,368 in credit card debt
We would definitely be open to renting it, if we can pull out a lump some of money to pay back family and pay down credit cards. I know our debt to income ratio is already very high. My husband and I both work in education. Perhaps we could get a cosigner to qualify? We would also need to take it off the market for 30+ days before qualifying, correct?
Any help or guidance would be greatly appreciated. Thank you in advance!!
@Ashley Pohlman Terrible idea!!! Who is doing your math? There is no way you can not be massively in the hole every month renting out at $2K. No wonder you are getting overwhelming response from renters.
Hmm, I lean towards giving family their money back s fast as possible, but you might also make cashflow work if by converting rental to a short-term rental. Best to you
I agree with @Larry T.
Sell Sell Sell
Check the terms of the loans too. Those no cost HELOCs hit you on the back end if you don't keep the credit line open for a few years generally speaking. A refi will most likely cost you up front.
Thank you for all of the advice everyone. Much appreciated. We are going to push to sell it. Hopefully we find our buyer soon!
I would check your numbers....there are a lot of variables that you didn't include in your calculations...... then talk to some banks and see if you can refinance in a way that you pay off ALL of your outstanding debt to family and CC....and the terms still make this a profitable rental....
But my gut says to sell it.........
I think it would be hard to make any money renting that property.
@Ashley Pohlman , unless you see this house doubling in price in the next couple of years, sell now. Too much money locked up for the rent your getting.