2nd Investment Property Purchased with HELOC on 1st

[Chris Baxley]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $425,250
Cash invested: $107,000

After 4+ years of success with our first single family buy and hold, which I had purchased with $0 down on a VA loan before my wife and I met, we decided to pursue our 2nd. We used a HELOC on the 1st rental for the down on the second.

What made you interested in investing in this type of deal?

We had success with REI with our 1st property and, when I knew my wife had grown comfortable with it, I pushed to expand the portfolio to a second single-family buy-and-hold.

How did you find this deal and how did you negotiate it?

Retail market with a retail broker

How did you finance this deal?

Conventional loan with the down coming from a HELOC on the first investment property that we had.

How did you add value to the deal?

Home was only one year old when we purchased it, so no need for structural investments. I did include a clause in the purchase agreement that I be allowed to market and show the house to potential renters before taking formal possession. I had it rented before taking possession. On day-of-close, we took possession in the morning and I handed over the keys to the renters that afternoon.

[Diego Zambrano]

@Chris Baxley congrats and best of luck with the 2nd property. Did you use a local lender in your area to obtain the heloc? My understanding, from talking to a few local bankers in my area, is that most banks will not give a heloc on an investment property. Curious as to how you bypassed that. Or do you use the first property as a primary residence as well?