Leverage Equity in our Bklyn Apt for first investment property

[Emily Gorski]

Hi everyone- Emily and Colin here!

We closed on our apartment in South Slope, Brooklyn in March 2018. It was a condo conversion, so after a few years of lawyering up we negotiated 30% off the asking price of the unit. Since we have no immediate plans to vacate the space that we love and the mortgage was comparable to our rent (minus HOA fees) we figured it was a win-win. The property is in an up and coming, quickly gentrifying area. We purchased for $644k with 20% down and the property appraised at $870k. The mortgage is under Colin's name only. In June 2018, we had a unexpected opportunity to purchase an Airbnb rental property in the Catskills. It was a property we rented for the past 5 years, fell in love with it, the area and the owner. Our dream of having an upstate escape was finally coming true- but at it's price. We purchased for $297k with 20% down, the mortgage is in both of our names and is a 2nd home not an investment property w/ LLC etc. The cash flow per month varies by season, but we at least break even on costs annually and we get to enjoy it whenever we want! However this is not a passive endeavor whatsoever.

Fast forward to now where we are looking to move forward with some passive income streams through real estate.  Our interest is peaked in multi-family, but looking at everything. Needless to say from that purchases (and Colin maxing out his 401k for his S-corp each year) we are out of cash, but after attending a webinar on BP this week we heard all about ways to finance multi-family properties. (we are also signing up for BP Pro for sure!) 

Is there some way we can leverage this Bklyn apartment given its equity, through refinancing, HELOC or something? We don't know where to start.

Thanks!

[Jason Lee]

Your DTI seems too high to get another mortgage, and not sure how they underwrite Helocs but that might be an issue. Your CPA's advice to have 6 months cushion is sound but just because you get a Heloc doesn't mean you need to use it. It can just sit there and it could also be used for emergencies.

I should have been more specific and said a self directed solo 401k with checkbook control. With that you could purchase real estate within the account just like you would stocks, funds, etc.