Taking the advantage of increasing equity - HELOC

[Huy N.]

This is not really a traditional success story, but I think it is in term of financing. Has anybody take advantage of the rising price of real estate and set yourself up a credit line or two? I would start with HELOC - Home Equity Line of Credit.

This is for my own primary resident. I purchased it for 90k with 20% down 2 years ago and now the property is worth 125k. However, I have a hard time to make bank believe that the property is worth 125k although i provided all the comps, and i have to go back and forth with banks. Long story short, i landed with Chase and was able to setup a 20k line with them, but at 7% interest rate. The rate suck but they are the only bank that are willing accept the 125k value of my house.

It costs only 50$ to setup and now i have an extra 20k to spend incase of emergency, or downpayment for the next property, and the rate is better than credit card. If i ever decide to  move on and rent this house out. I have an option do to 100% leveraging since i put only about 18k for the downpayment 2 years ago. Return rate will be infinite! 

Does anybody in Houston know a bank that is willing to do a HELOC for non primary resident? I have two more houses that i could take advantage of, but having no luck finding the bank that will do HELOC for non primary property

Now just for the sake of the pictures! Here is the before and after pics of my living room. Costco laminate was on sale during the holiday for 1.10$ per square foot and it added value into the house. This is the kind of laminate i use on all my rental houses as well. So far they have been affordable, durable, and looking nice

[Jim Sakalis]

Mike,

Thanks for your inquiry and question.  Well private money is one way, but I never do that since it cost too much money.

It's actually done by finding a property that already has equity in it and structuring the deal around it.  For example; Let's say you were going to purchase a home for $200,000 and the property is really worth 280k.  Your goal here is to increase your sales price so you can receive money back at closing.  In a lot of states you can actually get money back at closing as a buyer and it not be considered a kick back.  ( Georgia being one of those states).  If you are in one of those states that looks at it as a kick back than just structure the contract that you are going to receive these funds for upgrades, etc. So if you want to get your 10-15% back than you use a formula that increases the loan amount and then you receive your funds back.  What you end up doing is borrowing from the existing loan at that same interest rate.  It is just like a cash out refinance.

If you ever want to purchase a property through us we can structure it for you.