How should I use my equity to purchase another rental property

Question

I am brand new to biggerpockets. I currently own three properties. 1-single family home(primary residence ), 1-3units, 1-6units (all are rented). I have a lot of equity built up in each property, but I am also locked in at great rates. I would like to avoid refinancing if there are other options. Any advice will be appreciated.

Thanks

Sean

Thanks

Sean

Erik Estrada · Answer

There is a program that allows for a second 30 yr fixed mortgage on non owner occupied residences. Max CLTV is 75 % and the max loan amount is capped at $450k

Adam Fisher · Answer

Hey Sean,

I’m newer to bigger pockets as well. My wife and I started our real estate journey by taking a HELOC on our primary residence to put 25% down payment on a 4-family in Clinton MA. I just listened to Matt Faircloths book on raising private capital and it said for a longer term loan that a HELOC isn’t the best bet because the rate goes variable. I’m enjoying a comfortable 2.1% right now but in about 6 months that thing will sky rocket. Implying a cash out refi may be best if your strategy is another longer term hold. I’ll keep you posted but this is going to probably be an early financial mistake I’ll be learning the hard way on. -Adam

Owen D. · Answer

Hey Sean - I'm in Quincy and have a similar situation. I haven't fully explored the equity financing options but have heard its tough to find a lender that will do a HELCO on an investment property. I'm definitely interested to hear about what type of plan you proceed with if you find something that makes sense for your situation.

-Owen

Eliott Elias · Answer

HELOC

Devin Peterson · Answer

Hey Sean, Sounds like a heloc may be in your wheel house. I see you are in Boston. I'm in Peabody myself!

Sean Galligan · Answer

Sounds good thanks!

Sean Galligan · Answer

Thanks! I’ll have to look into that. I see that you’re in California. Do you know if that’s common in other states?

Sofia Hirani · Answer

Did you look into getting a HELOC?

Billy Daniel · Answer

We are currently taking out a second mortgage on one of our properties to buy another.  I'll let you know how it goes, but the numbers are pretty solid!

John McAllister · Answer

Get HELOCS- then use that line of credit to do Sub2 and seller Finance deals. Creative finance etc . Ride this low tide wave in the market back up for the next 8 years.

How should I use my equity to purchase another rental property

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