Next Investment Move??

Question

Hello everyone, I am reaching out looking for guidance on what my next move should be. I currently have three rentals, all occupied, two in NC and one in MI. I have conventional loans on the two NC properties and have owned for less than one year. The one in MI has no mortgage and is worth approximately $350k. I have considered opening a HELOC on the MI property to fund flips to gain capital. I currently have $80k to invest as well. Opinions/guidance on my particular scenario are welcome and appreciated.

Eric Merritt · Answer

Thank you ma'am for the response.

Eric Merritt · Answer

Thank you for the response I'll have to give Ridge Lending a call. The only bank that I have been able to come across the offers a non owner occupied HELOC is Pentagon Financial which has a 16 week closing time.

Allen McGlashing · Answer

@Eric Merritt

For your situation I would strongly consider getting a HELOC on your property in MI with interest only payments and NO prepayment penalty; also the longer draw period the better. With your goal being to flip houses, that would give you the immediate cash on hand you need to fund some deals with a lower monthly payment rather than the 30 year cash out refinance higher payment. The good thing about HELOCs are they are like credit cards you can draw on and pay them down when ever (in the draw period), so if you take on a HELOC with a 10 year draw period you have those funds for 10 years revolving. Then once you have enough capital just pay off the HELOC before the draw period is over.

Hope this helps GOOD-LUCK

Brandon Myking · Answer

Obviously, every situation is unique and there are a million ways you could go, so I’d say go with what gets you excited

1. Cash out refinance on MI property. I am currently refinancing an investment property and am getting a rate of 3.5% on a 30-year fixed. That’s hard to beat. Figure out what amount you can take out so that the MI property will still provide you solid ROI and CoC returns.

2. Get pre-approved for a purchase. If you willing to relocate (and your current residence will cash flow), you can get a low money down loan on a new residence (ideally a house hack). If not, then I would be looking to scale into small multi-family (2-3-4 plex) that you can do some value add with light rehab. It’s still a residential mortgage just with higher down payment requirements on a conventional loan. With your experience in owning 3 units this would be a great next step for you.

3. Cash flow has now increased, save your profits to reinvest, rehab your multi-family, refinance, recapitalize and invest again.

With your equity you are in a strong position to make some good moves. Just remember, take your time, buy at the correct value, establish your systems early and know what your goals are, when and how you want to get there, and what your plans are when you do. Good luck with everything and keep us posted.

Alecia Loveless · Answer

@Eric Merritt If you have systems in place in both markets I would look at which area is likely to give me the best return in my investment. $80,000 will give you a nice down payment, or if you take some money out of your MI property you could find something larger/nicer or a couple properties depending on price point and your goals.

Personally if I was comfortable investing OOS and the returns were both comparable I would look to MI for my next property since you have 2 in NC and only 1 in MI. I would diversify my locations.

Kerry Baird · Answer

A cash out refinance can pull cash out and give 30 year time line to pay back, at lowest historical prices.  HELOCs will adjust, and are revolving.  However, there are first position HELOCs where you can draw and pay back repeatedly.  Ridge Lending offers that product, called the ALl in One, which is terrific for high FICO score folks.