My wife and I, about a year ago decided to purchase her grandmother's house from her father after her grandmother's passing. The property is a 3bd/1ba 1100 sq. ft. row house in Philadelphia. He offered us the property for 60k with a 10 year payback. We spent the past year completely renovating the house. We spent approximately $45k in rehab costs. My best estimated guess is that the property is now worth about 130-140k. I would like to move out of this house in about 4-5 years and turn it into a rental. The taxes and insurance is about $2,400 per year. I currently own a condo in West Chester, PA that has been a rental since July 2013 and is cash flow neutral at this point. I need to refinance to lower mortgage rate.
What would be a good strategy or best way to leverage this property when I turn it into rental to further expand my real estate portfolio??
So, if my math is correct and your current market value is accurate...assuming no appreciation...and you didn't mention how you paid for the renovations, so I'm going to assume that was cash not financed...
In 4 - 5 years you should have about $100k in equity. You could get a traditional mortgage at that point, with an 80% LTV. Since you already have $100k in equity, you would have zero down payment. If we go with a ultra conservative $130k appraised value at that time, then you should be able to pull about $65k out in equity. That should allow you to purchase and rehab a couple of houses around the same price point.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.