Leveraging investment property equity in a Single Family Home

[Amy Healy]

Hi Bigger Pockets!

I'm trying to sort out my options and make the next best move now, or within a few years. My husband purchased a single family home in 2019 and were able to refinance to an incredible interest rate of 2.7%. We have since purchased another single family home and have been renting the other one since December 2022. The property appreciate rapidly over the last few years. While our initial down payment was modest, our loan to value is estimated at 71% based on current home value. Our current mortgage is 314k and we believe the house would appraise for 440k.

We would to acquire another property (or more!), but are uncertain about how to access equity from our investment property or if we should consider selling the house. For additional context, we don't think there much leverage in our primary residence as the LTV is 80%.

Does anyone have any suggestions on how we could leverage our investment property? Also, In this next property we are not tied to purchasing in Portland, OR. Any suggestions on other markets would be appreciated.

Thank you!

[William Sing]

Hey @Amy Healy, congratulations on owning a rental property! It sounds like you have a great opportunity to leverage your investment. To access the equity in your investment property, there are a couple of options to consider.

First, reach out to banks and explore the possibility of obtaining a higher loan-to-value (LTV) ratio. Discuss your current situation and the appreciation your property has experienced. They can guide you on the potential for accessing equity through home equity loan or a HELOC. I'd first look at local credit unions and then expand outwards from there and know you can sometimes get financing outside of the state.

Another option is to work with a private money lender. You can use the existing equity in your investment property as collateral by obtaining a second lien, similar to a HELOC or home equity loan. Just ensure that they are comfortable with being in the second position.

Your primary residence would probably be better to leverage since they usually have better terms in general LTV wise. If you're in Portland, look at OnPoint or potentially Rivermark as well. However, it's worth exploring all options with banks and lenders to see what best suits your needs.