How to go about purchasing a second property

Question

Hey all, been a fly on the wall here for a little bit.

like the title describes I’ve been living in my primary residence for a little over a year now. Purchased at 260k using VA loan. Refinanced to a 2.3 interest rate. Our home is now worth about 365k after we put in about 35k in renovations.

How should I proceed with purchasing another property in my immediate area ? If we wanted to reuse VA loan on another primary house my lender suggests it would be difficult for the underwriters to grasp moving into a multi family after owning a larger property less than 10 miles away.

So that leads me into going in as investment property

What would be the best way for funding heloc? Or cash out? I don’t really know how to find private lenders yet. ( also what do you guys use to show your lenders where their funds will be going)

I know I’m everywhere on this post but definitely need some insight

Daniel C. · Answer

Account Closed I can't tag Kerry Baird since I don't think we're connected but she always has a full list of lenders if you search her posts. I copied this from one:

HELOCs for investment properties:

The DTI percentage range varies by lender, and is less than what you will find for an owner occupied property, due to lender risk. While qualifying for a HELOC is dependent on your home equity and your credit score, good or excellent credit makes it easier to qualify. A good average to shoot for is 620 or higher. Plus, the better your credit score, the better your interest rate.

Ridge Lending All in One, first position HELOC

AFCU does 80% LTV on NOO. Utah

Americafirst 80% LTV on noo 65% LTV Utah

Arvest Bank AR, OK, AL, MO

Bank of Souther California

Bank of West (BNP Paribas) 60% LTV ELOCs

BB&T will loan on a rental portfolio

BBVA, now PNC

Bellwether NH and MA 85% to 100%, draw 10 yrs

BMO Harris, 3 HELOCs to 70% LTV

Boeing employee credit union

California: Cal Coast Credit Union and Fremont Bank

Citizens Bank -Minnesota, only in-state. Kyle Potswald

Citizens first position HELOC

CMG Financial 70% LTV

Consolidated CCU, high LTV NOO LOC, OR, WA

East West Bank, up to 60% LTV with "no docs" San Fran area

Figure 80% on a rental, not in LLC

FirstBank CO and AZ 75% LTV

First Florida Credit Union https://firstflorida.cumortgag...

First Commonwealth

First Midwest, up to 90% Chicago area

First Tech Federal. Wester states. Up to 80% if FICO is over 780, no appraisal under $250k value.

First Republic - California

Fulton Bank

GFA Federal Credit Union 10 yr draw, 10 yr repay, MA

Granite State CU, NH 90-100%

Great Lakes Credit Union

Hanscom FCU, Florida

HSBC 70%, for premier clients only

Horizon, Kalamazoo Michigan

Huntington 75% LTV 5 yr IO product available. Someone reported 80%…need confirmation

Hurst Lending and Insurance Investment property HELOC in Texas. No seasoning. Bridge, portfolio, foreign national and other specialty loan products.

Key Bank, FLorida flexible lender, HELOCs on second

homes and rental properties. 90% LTV on primary.

Merchants Bank MN See Pavel Ushakov

Mountain America Credit Union in Utah, Idaho, Montana, Nevada, Arizona, New Mexico. 85% LTV, promo rate of 1.99%. Can refinance an existing mortgage on investment property to a shorter term "Mini Mortgage."

Navy Federal 80% LTV

Norway Savings Bank, Maine

PenFed - max 3 other properties, including primary. 80% LTV, prime + 1%, <4 properties

Quorum Federal Credit Union 80% LTV, owned by LLC is OK. Very flexible lender. NY. Tiffany Mazzoccoli. 2021

Regions- yes HELOC but no LOC

River Bank & Trust, AL

SCCU Florida 70% LTV, 6.25% interest only, not LLC

SECU NC 65% LTV rate 2.75% Oct 2021

Signature Federal Credit Union 75% LTV

Silvergate Bank

Sound CU "non-owner occupied HELOC, capped at $150K and interest rates are prime + 2%, 3% or 4%, based on credit, not to exceed 70% ltv."

S&T Pennsylvania

TCF Bank

TD Bank 75% line with FICO about 740

TIAA Direct was EverBank

Torrey Pines Bank

Troy Bank & Trust, AL

Trustco

Union Bank, specializes in noo HELOC. KCMO, NE

Union Bank, MUFG.

Upstate Bank in Rochester NY, LOC up to 80%

US Bank 80%

Vectra Bank - Colo

Veritex, Texas HELOC

WellsFargo 60% LTV

Workers Credit Union, MA 80-100%

WSFS...up to 70% on rental

Zions Bank, Utah

Jonathan Klemm · Answer

Account Closed - Props for jumping on to the forums for some feedback on an important question.

My recommendation assuming you are locked in ready to move is to do a refi and then use an FHA instead of VA loan to move into a multi-unit and house hack.  Now, if you aren't sure how fast you'll move and just want the money on standby then the HELOC is probably the better option because you don't pay interest on undrawn funds.

Just curious, what location are you in?  If you add some cities as keywords it might help to find local investors that know your market.  At least here in Chicago, the BP community is pretty strong and always helpful.

Doug Spence · Answer

Account Closed is spot on. I recommend searching the forums or making a post stating that you are lookin for more info on a HELOC in <your city>. That will trigger the keyword alerts for lenders in your area.

How many local meetups have you gone to? That's another fantastic way to meet with like-minded individuals in your area. You might even find someone with capital but without the time or desire to run a deal. That brings me to my next suggestion: consider partnering with someone who can bring capital but doesn't have the time or desire to find the deal and run the rehab. Then you may not even need the HELOC.

If you do end up using the equity in your home for a HELOC, how will you fund the next deal after that? This is why partnering with folks is such a great strategy: there's no limit to what you can do, but if you're relying on home equity, there is a limit.

Good luck and keep us updated on your progress.

Account Closed · Answer

@Doug Spence Thank you so much for this info, ill take to other forums to see if there are people willing to help in my local area. I've gone to one local meet up that was geared more to wholesaling in which they did grant some knowledge but i don't think i was quite prepared at the time. I was just a sponge taking in the information. Your information rings very true. Find partners

Ryan Thomson · Answer

Account Closed you could refinance again into a conventional loan. Then you should be able to use your VA loan again no matter how far away it is right? I might try to find a second lender opinion and see if that is an option.

The most that many lenders will let you cash out for is 80% LTV. So at 365k appraisal you could get a 292k loan, allowing you to take out 292k minus whatever you still own on the house. Probably 35k ish would be my estimate. But is that enough to buy another property as an investment?

Doug McVinua · Answer

Account Closed One important item to consider is that almost all of your options for pulling cash out of your current property will be accomplished with more flexibility and options while it is your primary residence. Once you move out and it's an investment property many of the guidelines lenders use will change so just a heads up to put in place solidly, fairly permanent financing of this one before you make the change.

Congratulations on your thought process, you are on a solid path for success!

Account Closed · Answer

@Michael K.

Well moving is an option! I’m not ruling that decision out. I’ve been keeping my eyes peeled for a duplex or even a home with an in-law quarters in my location. Ready to jump on it and if it’s a new primary residence I can use my VA loan to attain it. That’s honestly my main focus is finding a multi family.

Account Closed · Answer

@Michael K. You’re suggesting sell and 1031 into a larger estate ? That is an option but I’m leaning more toward a HELOC. I see interest rates going to rise mid next year so I think my best option would be to wait till my roof is updated and with solar and take out a HELOC on the property. To prepare myself for what’s about to come. I haven’t made any other moves other than just updating the property.

Account Closed · Answer

@Doug McVinua

Thank you for the insight and encouragement sir, I know they say the first step is the hardest and I’m feeling that right now ahah. But I will most definitely take advantage of these benefits while it is my primary!

Account Closed · Answer

@Daniel C.

This is great, I may pursue with using Navy Federals 80% since I currently bank with them if i do decide to use the HELOC!

How to go about purchasing a second property

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