Seller Financing, Down Payment, HELOC Etc.

[Kevin Stein]

Hello BP,

Similar questions have been asked many times but I was hoping to get some advice on my particular situation.

I own my personal home and a duplex that I rent. The duplex has ~55k in equity. My initial thinking was that I wanted to use the equity in the duplex to fund the down payment on my next rental property. However, I just found out that my lender will not do a HELOC against an investment property. So now I'm left struggling to find money for a down payment.

My lender is requiring 25% down, which for me means I'd need about 25k for a down payment.  I have about 10k in reserves from my current rental but want to keep that in place for unforeseen expenses, etc.  And even if I did use some of that money I still don't have enough for the down payment.

I am not interested in a HELOC on my personal house (well, my wife is not interested in it) so that's not an option.

I just found one duplex where the owner would offer 50% seller financing on the property.  So now I would only need $12,500 down, but again, I don't want to raid my rental reserves.

I'm wondering if I need to speak with other lenders. Do some lenders lend against the equity in investment properties (not just primary residence)? Do any lenders lend without a down payment when the LTV is less than 75%? In this case I would only be borrowing 40% of value of the property because the rest would be funded by the seller.

I do also have 35K in a rolled over IRA account from a previous employer. No longer contributing to that account, it's just sitting there so moving that to a self-directed account could also be a possibility but to be honest it scares me. Seems like a lot of moving parts.

Sorry for the long post.  I wanted to outline my situation to see if the brilliant minds at BP have wisdom for me!  Thanks in advance :-)

[Brian Eastman]

@Kevin Moen

SDIRA accounts are subject to the exact same distribution rules as any other IRA. This is retirement savings and has tax preferred status to help you build up a bigger nest egg once you reach retirement age. The trade off is that the funds are essentially off-limits until such time as you retire.

A SDIRA is simply a means of investing differently and having the choice to diversify out of stocks and into something you know such as real estate.