Looking on buying a property and living there fixing it up than moving and using it as a rental. The property I’m looking at has a lot of potential to force a lot of equity on it. I was wondering is it a bad idea to do a cash out refinance and use that equity to invest into another rental? Or is that a sketchy situation to put myself into. Thanks.
Forcing appreciation and then refinancing is a great idea. Just make sure you don't buy or refinance as your primary residence, or you'll need to live in it, usually for another year or more.
You may run into occupancy issues with certain loan guidelines. If you purchase a new property as a primary, live in it then rent after rehab, you are more than likely going to have to live there for at least one year. If you go in as an investment property, many lenders don't want you to live in it. Be sure to ask your lender about occupancy. A Second Home typically only requires you to live in the home for 2 months each year, you would be free to rent out the remainder. There are a few options there to think through...
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