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Updated over 18 years ago,
How should I get $12,000 for rental property repairs?
My wife and I want to buy our 1st rental property. We are currently looking into a duplex that we could buy for $40,000. We can get a 6.5% for 15 years ($314/mo for P+I) or a 7% for 30 years ($240/mo).
My wife and I have good salary history and good credit (780 and 810). After 10% down + closing costs we would need to put $6,000 down (10% of purchase price + $2,000 closing costs). We can and are willing to pay the $6,000.
The duplex will rent $525 per unit ($1,050/mo) after repairs are made. Repairs are estimated to be $12,000. We do not want to use any of our other current assets (401K, IRAs, etc.). Our plan is to rent the property for many years to come.
We have $65,000 equity in our primary residence (which has a 30 yr fixed for 5.875%... if it matters).
What would be the best way to come up with the $12,000 for repairs? HELOC? 2nd Mortgage? Other?