Heloc against primary for investment

[Eddie Quimby]

Hello BP my name is Eddie

I live in new Jersey I have a $265,000 mortgage on my primary residents with about 80,000 in equity. I am trying to purchase a rental property. 1 problem I am cash poor I have great credit and was wondering if I should take a HELOC for a down payment on a rental property in the range of 160,000 to 190,000 can anyone share some insight to my situation

Thank you in advance

Eddie

[P.J. Bremner]

@Eddie Quimby

I like the idea of using a HELOC to help fund projects. I currently have a HELOC on my primary and using that to fund whatever my liquid cash cannot cover for any giving purchase. The only problem I see for you would be your LTV numbers. Typically you can get 85% - 90% of your LTV out for a HELOC, so if your property is worth $345k and you find a bank that will lend you 85%, you are looking at $293,250 minus the balance of the 1st mortgage: $293.250 - $265,000 = $28,250. This would be the MAX you could take out, assuming the appraisal comes back at $345k. Just be aware, appraisers for HELOCs are pretty conservative in my experience. My HELOC property should have been around $550k - $600k easily and they barely gave me $502k. I am an experienced real estate investor and real estate agent so I know how to run my own comps and the appraiser was off by a bit in my opinion, but you have to play by their rules. Hope it all works out for you!