Using HELOC or LOC or both to fund real estate investments?

2 Replies

Okay so Iam a novice investor with only 1 rental property under my belt that is owned free and clear (also I'm only 21). I was thinking about using the equity in that home to go out and do other real estate investments.

Now the property isn't worth much (purchased it for $26k in 2014, listed for $22k) and I know the LTV on a non owner occupied home is low (Wells Fargo is 60%). So if I can pull out only a small considerable amount assuming I can pull out anything at all would it be a good idea to combine that with the money from my regular LOC? ($5k limit but working on raising that)

Or would it be just a better idea to raise my LOC as much as possible and just try to use the funding from that?

Also if anyone has any other tips on how to further my investment portfolio with my limited funding and average credit score (694) please tell me. I'm all ears! 

Thanks in advance

Mack

You might be better off seeing what the house will appraise for - and get a non-owner occupied investor loan from a bank that may lend up to 70% - and pull some money out. Take the funds and buy another home and refinance that as well (BRRRR strategy). I don't know if a bank will offer just a LOC on an investor property. Doesn't hurt to ask - but shop different banks. Some may go higher than 60%. I'm working with a local bank offering up to 70% of after repaired appraisal.

I also own a rental free and clear and want to take advantage of that equity for another investment. However, I have mine in an LLC for liability purposes, as I do short term vacation rentals. I'm shopping with portfolio lenders now, I'm fairly certain that I'll be able to do 70% LTV with a small local bank, as opposed to some of the larger banks.

Another option may be a HELOC on your primary residence. I just checked with my credit union the other day and they are willing to go 80% LTV at 4% or 90% LTV at 6%.

Keep shopping around until you find someone that is willing to work with you.

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