Cash out or HELOC to begin multifamily investing in northern NJ?

[Bethany Weinmann]

Hi everyone!! I've been listening to podcasts non stop, flipping through forums, and scouring the mls day after day. I want to begin my investing journey by purchasing a small multifamily in Northern NJ and house-hacking for a short period of time until I can complete the BRRR process and move on to the next property. I would be able to invest anywhere from Elizabeth, NJ and north (because of my work commute). I currently have a home in Haskell that i owe $189,000 on and would appraise for somewhere around $260,000. I am still paying PMI on my home (bought for $212,000).

My idea is to refinance to remove PMI. At that point, would it be smarter to cash out refinance or get a HELOC to get some cash to invest in a small multifamily?

I would love to connect with local brokers so I can get a good idea of my options and what would work best for me.  Also, I would love to be able to help out any other investors by running numbers or anything else they need so I can gain some experience!

Any advice/connections would be very appreciated! Thanks everyone :)

[Darrin Gross]

Bethany, 

You might check with your CPA before doing a HELOC. If I understand the new Tax law, you can no longer deduct the interest from the HELOC. But, sometimes, you have to do what you have to do to get started.

What do small apartment buildings go for in your area on a per unit basis?

If you are able, I would encourage you to look at 5+ units.  The financing on 5+ unit buildings look at the income from the property rather than the income of the buyer.  If you buy 4 or less units, traditional financing will be subject to your debt to income ratio.