Investor · Santa Barbara, CA · Member since 2015 · 5 posts · 2 votes
My husband and I own two properties in southern CA, a coastal condo and a 10 acre ranch house outside the city.
We have about ++$400,000 of equity between the two.
The goal is to not sell anything, as both of them are cash positive and we'd like to hang on to them. Good renters, good locations, property values and rents are still rising.
We've now moved to a different town we'd like to buy a duplex where we're living--I don't know what options we have to use equity in one of our properties as a down. Is this possible? Does it require a re-finance?
We're good at buying and fixing properties up, but now in a market that requires large downs ($200k).
So that's the question: With $400k in equity, what is possible? And what would you do if you wanted to get into a duplex that's $850k?
Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
9y
Most, if not all lenders should/will accept home equity money as a down payment as that money is your money and comes from a secured asset, a home. Of course very lender varies so you'd have to make sure they'd be OK with that.
Make sure you have all the numbers covered, I's dotted, and T's crossed before using the equity. Also be sure that the duplex will still cash flow as the interest rate adjusts on the HELOC if you plan to use that to maintain flexibility. If you use a general home equity loan, be sure to get an amount to which you can use all of the funds rather swiftly and not be stuck making payments on money that is not being used. Best of luck.
I would just make sure that the rents would get you the cashflow you need on a 637,500 mortgage (25% down).
I would get with a lender that would close a cash-out on one of the existing properties and the duplex purchase at the same time. If you could I would just cash-out one for now and cover any additional lending costs outside of DP with current cashflow.
If you're confident that it will rent and the numbers make sense, go for it.