Tips for Raising Capital

[Devin DiManno]

Hi Everyone,

I recently bought my first piece of property 2 years ago (3BD, 2B, 1300 SF) by putting down 10% ($60,000.00). I am looking to refi once the rates drop to bring my P&I down and hopefully eliminate the PMI I am paying. I got this property at the right time, it was on the market for $699,000.00, seller needed to sell, I offered $550,000.00 after they cut to $650,000.00 and we agreed on $600,000.00. Assuming the property is appraised at $650,000.00 I am hoping the equity will get my LVT to 75% eliminating the PMI, adding to the potential cash flow when I go to rent and then putting that cash flow + personal savings away to raise capital to buy another piece of property.

I realize that in order to buy my next piece of property I will want to put down 20% to avoid PMI and a high mortgage but saving 20% for a piece of property in my area is going to take some time due to the high price ranges $500,000-$700,000. I wanted to ask the the group if anyone has used alternate means of raising capital, strictly to buy another piece of investment property.

I am new to the group and looking forward to any dialogue. 

Thanks,

[Clayton Silva]

Couple of thoughts, if you think the property is worth 650k now, I would reach out to your existing loan servicer and ask them for the PMI removal form. You can apply to remove PMI early if the equity is there. They may have an appraiser or broker perform a BPO (what they did for me) and so you need to be very sure the value is there. That will save you the PMI without the cost of doing the refi just yet. As far as tapping into the equity without doing a refinance, we offer some great HELOC products which are especially good for funding short term deals like ground up constructions or fix and flips.