Buying a house with equity - Best option to fund remodel?

[Christopher Oliva]

Hi Everyone,

I'm going to be buying a house at well below market rate, it isn't in terrible condition but it does need to be updated. My goal is to get it remolded as quickly as possible and turn it into a short term rental.

The house was built in the 70's and is in good condition considering it's age. The interior is almost entirely original so it will need some significant updating, there's some exterior work that needs to be done, and possibly some foundation work as well. In doing some market research it looks like I'll be getting the house at about 50% of the current market rate so I should have quite a bit of equity to work with, even in it's current condition.

Aside from using my own money, what would be a good option to fund the remodel? A HELOC, a home equity loan, or something else?

Thanks!

[Andrew Garcia]

Hi @Christopher Oliva, the issue with a HELOC is that they are generally variable rates. However, they offer the best rates. I would do a HELOC then 6 months later, once the rehab is complete and the appraised value is higher, cash-out refinance into a 30-year fixed-rate loan and pay off the HELOC.

Hope this helps! Let me know if I can be of any assistance.