Looking for advice on fund rehab to turn Primary home into rental.

[Jonathan J.]

I'm been a homeowner since 2011, long story short I got way too much house (2500 sq feet, 4 bedrooms [to house a blended family], etc) for my income at the time, and the legal issues I had shorty after closing didn't help either. Needless to say over the years I maintain the house in usable condition, and made any required repairs. However, I never had the budget to update the house with current trends, or fix some wear and tear items (ie flooring, windows, old appliances, etc). 

I got news earlier this years that I would have to relocate to the SoCal for my next position. I was planning on appling for loan when I was 6 months or less from moving to fund the rehab of the house so I can turn it into an investment property.

But like clockwork, as soon as leave the country for a business trip, something breaks. (The last few trips the washer broke, dishwasher, HVAC capacitor). Well got the call yesterday that my AC was not working at all, after a quick inspection by a tech, they found a leak in my evap core, and since the system is older R-22 refrigerant system that been been phased out, I'm now looking at new loan with Ally bank for just over $13K (had two 0% APR choices. 1) 0% and 0 payments for 6 months, or 2) 0% for 18 months and min payment of $325ish due within next billing statement). I chose option 1 so I can paid odd the Ally Loan with the loan or worst case, tap into savings to pay in full before 6 months.

I'm looking at the possibility moving in March or April of new year, meaning I was planning on applying for the loan by Oct23.  

Depending on when this Ally loan reports to the credit reporting agencies, I would now have a new loan on my name that was opened within 30-60 days. From my understanding banks like to use the older FICO models for Home Equity and HELOCs. Should I plan on applying earlier to have a better chance of a approval? Or wait and take action on my original timeline? 

Also I didn't want to touch any savings, just in case I have to put cash towards rehab and to cover housing cost in SoCal until my raise takes effect to cover the differences in housing cost.

Numbers:

Estimate Home Value: $315,000-350,000

Outstanding Principle: $201,000ish

APR : 3.25% ( was variable at the beginning of loan)

Home Build: 2003

Projects I'm looking to complete before rental ready.

- New HVAC

- New windows (current ones are cheap and don't stay open or lock properly)

- Replace flooring (downstairs is carpet and vinyl, upstairs is all carpet)

‐ Update kitchen (counter tops are formica, replace old appliances, paint cabinets)

- Update Master Bath (replace counter top due to cracks, new paint)

- Repair front porch due to small fire (damage some floorboards and railing)

-Trim or cut very large Gumball tree down

- Garage door panels replacement 

- Small siding repairs

- Repair wear and tear on walls and paint the whole interior.

[Dan Portka]

@Jonathan J. so you have over $100K of equity in your house... You could sell and put 5% down on a socal duplex and take advantage of owner occupied loans and the great appreciation here. Perhaps buy a bit of a fixer to add value to the property during the 3 years you plan to live in it, then either sell and buy again where you move or rent out the duplex.