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Updated about 6 years ago,
How to Tap in Equity After Forced Appreciation on Paid Off House
Hi Guys,
Note that i am based overseas (Fiji), so the numbers ($FJD) are for my area. My question requires greater emphasis on the process rather than the figures.
I have a completely paid off personal family residence home valued at $1 million. Secondly, I have a 2nd paid off property through inheritance that is worth $350,000. I am currently renting it out on AirBnB and it is getting me $2,000 a month (safe estimate at 14 days occupancy in a month, although current rate is 18days).
My question is i want to do some more reno work at my primary residence approximated at $60,000. I am expecting to add around $100,000 of value, but i suspect i can get more (contractor is a friend with super cheap rates, RE market is really good, 3-5 yrs of political stabilization after a series of coups in the 90s and 00s and prime location).
What is the best way of funding that rehab using my above properties and then accessing that equity after forced appreciation (rehab). Ideally i would then like to use Rental Income from AirBnB to pay off source of funding for rehab on primary residence and being able to pull out profit from equity gained to use on another real estate investment. Also, i don't want to take out more than $200,000 on my primary residence, as a peace of mind thing, whereas my investment property i will go as high as 70% = $245,000.
My long term goal is to use that profit gained from rehab works coupled with a HELOC/HEL on 2nd property (~$245,000) to obtain a third multi-family using BRRRR strategy (Just AirBnB instead of Long Term Rent) property to tap into AirBnB market which is just starting to develop, and by my personal local experience it will be a long time till legislation comes into place (things move slower in the Pacific Islands).
Appreciate any assistance with my query. I basically require validation of strategy and suggestion of improvements or viable alternative approaches.
Regards
Jane