Starting Out...Using Equity in Investment Property to Grow

[Robyn Henderson]

I'm new to BiggerPockets and was referred to this website by a friend. I was hoping to get the advice of more seasoned professionals. My family has a 3 unit investment property in Cobble Hill Brooklyn NY which has appreciated from $40k when my parents bought it to about $3M today. The mortgage has been paid off for many years and it currently grosses $6,300 a month. My parents live in Boca Raton Florida and just collect the rent checks every month with minimal upkeep. 

I was thinking of getting a HELOC on this investment property. I was able to find a credit union who would do a 5 year draw and 15 year repayment for 4.75% up to 70%LTV, 5.75% up to 80% LTV and 6.75% up to 90% LTV with no maximum cap on the amount as many banks that I researched seemed to have.

Another option would be to get a nonconforming mortgage from a portfolio lender. I am just beginning my search so I haven't researched this yet.

My parents would prefer to keep the property as the area has good renters and continues to appreciate. Besides, the NYC market is slowing and I dont know how fast this property would stay on the market if we did sell.

I feel there is lots of money trapped in the home equity and I want to put it to good use by acquiring real estate elsewhere. I'm very familiar with residential real estate (1 to 4 units) but I think we would be able to use this large sum of money and get into commercial multifamily properties. Alternatively, with a HELOC, I could buy smaller properties for cash and then use the BRRR strategy.

For those of you who have done similar transactions, what's the best approach? What has worked for you?