next step after house hack
Looking house hack a 80k duplex (with FHA loan) and putting 20k into the rehab. Assuming it appraises for 120k + ARV, how can i leverage my equity in this duplex into another deal ?
Can I use a HELOC as a down payment for another deal ? Cash Out refinance ? Do you guys recommend any other way to use the duplex as leverage to purchase another investment property after. Don't want to corner myself
Any feedback is helpful thank you !
Quote from @Nick Mazziotti:
Can I use a HELOC as a down payment for another deal ? Cash Out refinance ?
Yes, you can. Probably use a cash-out refinance over a HELOC if it's going to a down payment. Also, try to save all the money you keep in your pocket by house-hacking. If you can find other deals like the one you're describing you're in a good position to keep BRRRRing and have your portfolio grow.
Just keep in mind if you do pull out the equity, most lenders will only lend on 75% of the equity you have in the property. This will vary be lender, but just be aware of that and shop around.
Also, as of now, I like the HELOC route, because I don't have to pull all the money out at one time. With a line of credit you can draw as much as you need at anyone time for whatever you're approved for. Vs a cash out refi, you have to take all the money out at one time and then you are paying interest on that amount even if you aren't using all of the cash right away.
I'd speak with some lenders and credit unions and weigh your options. Also, try to figure out how much money you are going to need for your next deal. That will be a good starting point.
Best of luck!
@Nick Mazziotti you can do either! If you buy now your rate will likely be in the low 6's and there might be an option later down the road to cash out but I dont think rates will be super low for the next 24 months. Some Helocs are pretty expensive cost but if you can refi that loan to pay off the heloc then you are able to rinse and repeat.