Noob Trying to Access Equity after Rehab

[Hunter H.]

Hi All,

I've been a lurker for years but finally made the jump.

I have a property under contract in a highly desired neighborhood in Michigan. The purchase price is $160,000 but needs roughly $40,000 in rehab. The ARV is close to $250,000. This is being purchased with a conventional 30 year fixed rate mortgage, 5% down at closing. Post-rehab this should rent for $2200/mo and my expenses are fixed at $1000 (mortgage, insurance, taxes).

I'm trying to understand my options for accessing equity as I plan to keep this as a long-term rental. Due to the bank financing and overall nature of the deal, I'm thinking this is more of a HELOC property than cash-out refinance.

I'm getting caught up in calculating my usable equity after the rehab is complete and my property value increases. I'm not sure what happens to % equity in the existing mortgage if the property value increases but I haven't refinanced.

Ultimately, I think I'm looking for validation in pursuing this deal and hopefully advice on accessing equity after the fact.

Really appreciate any help.

Thanks.