All Forum Posts by: Michael Henry

Thank you all for the responses. I took out a HELOC to purchase a turn key rental in Alabama and will sell my first once the lease is up in feb 2020. I actually have enough cash to Purchase two rental homes which worked out great.

I owe $117k to the bank I have more than enough equity to pay the investor back his $25k and some left over. 

Hello bigger pockets,

I’m stuck at a turning point with my first rental property and don’t know what to do to further expand my portfolio. 

Back story on this property I purchased in 2015 as my first home. Property was undervalued at the time appraised for 131k , I purchased it from an investor who owned other units in the same condo complex. I paid 156k for the property 10k cash to close (5% down) of my own money and 25k from the investor. Bank would only loan me 95% LTV based on a 131k appraisal.

Fast forward to 2019 property is worth 200k. I’ve had a tenant in place for 1 yr and plans on staying another at $1775/mo 

My total monthly expenses in 2018 were $800 mortgage / tax insurance. $530 HOA / $151 to the investor. My monthly cash flow was $280. (There is no PMI on the property)

2019 my property taxes sky rocketed making my monthly payment $930/mo dropping my cash flow to $130/mo. 

I want to buy another rental property should I take out a HELOC with the $59,000 in equity I have? Should I cash out refinance , pay back the investor and use the rest to buy more property ? Or sell the property outright ?

Again I have a tenant in the unit until March 1 2020. Unit is in excellent condition built in 2007 and in a very upscale neighborhood.