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Updated over 1 year ago on . Most recent reply

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Ajay G.
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Votes |
6
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Question about leverage

Ajay G.
Posted

Hi BP community,

I'm a brand new investor in the process of completing my first purchase of a single family rental. I am leveraging a HELOC on my primary home to fund the 25% down payment for the investment property. Planning to get a low/no cost mortgage to close and then refi later to get some money out. My question is, how do I go about buying my 2nd/ 3rd properties and so on. Here are some details that might help with your answer:

Primary Home equity ~$2M (not including the HELOC)

HELOC $500k with 15 yr draw & 15 yr repay

Rental investment property ~$550k

Cash Flow ~ $50-$100/mth

I do realize that I will end up paying interest on the HELOC that I draw from for the down payment, which will be larger than the cash flow from the investment property.

Again, appreciate any help you can provide in helping me understand how i go about leveraging assets to buy my 2nd and 3rd properties and so on. 

  • Ajay G.
  • Most Popular Reply

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    882
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    Sherief Elbassuoni
    • Realtor
    • Bellevue, WA
    1,968
    Votes |
    882
    Posts
    Sherief Elbassuoni
    • Realtor
    • Bellevue, WA
    Replied

    @Ajay G., you do not need to put 25% unless you are buying small multi-family. Single-family homes are just 15% down. You do not also need to use all the $500K HELOC. All you need is a fraction of that to cover the downpayment and closing costs

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