Andover, MA · Member since 2015 · 103 posts · 13 votes
We took out equity from our residential house for a 20% down payment for our 1st rental property. We've been renting it out for a year now. Looks like the house has appreciate 25K more than when I bought it. What can I do to buy a third rental property? Can I take equity out from the rental property?...I'm hearing a no in my head but any advices?
@Joe Splitrock.@Andrew Johnson Yes, monthly rent is $1900, rental property mortgage + HELOC is $1500. Right now, my safest route is paying off the HELOC and then take it out again to buy a third house. However, it would take at least 2 yrs to do so. So that's why I'm scratching my head :). Thanks for your confirmation!
I think paying down the HELOC before getting the next house is a good plan. The two years will go by really fast.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
@Vy Mai taking out equity is an option as long as it appraises. Is it correct that you have a HELOC on your residence that was used to get the 20%? Can you share the numbers as far as monthly HELOC, monthly rent, rental property mortgage? My concern would be if you did refinance, are you still able to make the payments after you write the loan for more money?
Investor · Woodland Hills · Member since 2016 · 82 posts · 33 votes
9y
Banks made it very hard to get a HELOC on investment properties, but certainly gettable. And the closing costs are same as refinance. So try contacting as many banks as possible. Good luck.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Vy Mai One think you need to do is look at any costs associated with refinancing. Origination fee? Cost of appraisal? Since the fed raised rates would you have you pay a higher interest rate? Would a cash-out refinance increase the rate further? Let's say the equity has increased $25K and you want to pull out 80% of that, you're getting $20K out. But if costs for the loan/refinance hypothetically run $2K and your interest rate increases 1/4 point, is it worth it? The dollars amount might not be huge but as a percentage of $20K it may end up being high. That being said, I'm certainly not a mortgage originator/banker/etc. so your mileage may very or there could be other financing products that you can leverage.
Andover, MA · Member since 2015 · 103 posts · 13 votes
9y
@Joe Splitrock.@Andrew Johnson Yes, monthly rent is $1900, rental property mortgage + HELOC is $1500. Right now, my safest route is paying off the HELOC and then take it out again to buy a third house. However, it would take at least 2 yrs to do so. So that's why I'm scratching my head :). Thanks for your confirmation!
@Joe Splitrock.@Andrew Johnson Yes, monthly rent is $1900, rental property mortgage + HELOC is $1500. Right now, my safest route is paying off the HELOC and then take it out again to buy a third house. However, it would take at least 2 yrs to do so. So that's why I'm scratching my head :). Thanks for your confirmation!
I think paying down the HELOC before getting the next house is a good plan. The two years will go by really fast.