All Forum Posts by: Andrew Freed

That's awesome, congrats on the purchase. You have to take into account leverage. You always want a decent amount of equity in your properties and not be overleveraged. For instance, for my HELOC, I have about 60% equity in the property which leaves plenty of room to not be overcommitted. But to address your question, below are some requirements of a HELOC:

The top 5 requirements for a home equity loan or HELOC

Home equity loans and HELOCs have their own set of pros and cons, so it's important to consider your needs and how each option would fit your budget and lifestyle. Regardless of which type of loan you choose, home equity loan requirements and HELOC requirements are typically the same. Five base requirements include:

• Have at least 15 to 20 percent equity in your home. Having sufficient equity is key, since it determines how much you can borrow. It also protects you from going underwater on your mortgage.
• Have a credit score in the mid-600s. Many lenders set specific credit score requirements, but having a higher score will also net you lower rates.
• Have a debt-to-income ratio of 43 percent or lower. Typically, lenders favor borrowers who have little debt relative to their income. To lenders, this is an indication of low risk.
• Have sufficient income. Lenders may scrutinize your income to make sure you’ll be able to repay the loan. A higher income can also give you a better debt-to-income ratio.
• Have a reliable payment history. You can improve your approval odds and loan terms by maintaining a record of paying your bills on time. A pattern of timely payments will show the lender that you’re a low-risk borrower.

Source - https://www.bankrate.com/home-...

I'm confused by your question. Do you mind clarifying?

In regards to my LOC, I purchased another property via a HELOC. The amount I borrowed from the line of credit was added to my debt to income ratio to ensure I was still financial capable to pay the new properties mortgage. To be eligible for a HELOC, you need a decent amount of equity in the original property.

You can set up a HELOC on a residential or investment property as long as you have enough equity. And what's great about it is its essentially a checking account, you can pull out cash in seconds no questions asked. It is a super cool tool to leverage your equity into liquid cash without selling some quality assets.

@Manda Gouvion Of course. You have to read that book, it is the inspiration for so many millionaires out there. 

I purchased a 3 family via a FHA loan @ 3.5% down. I have decent cash reserves but I am not paying for any of my deals via cash. I opened a home line of credit (HELOC) on the first condo I purchased in 2015, which funds all of my real estate transactions moving forward. Equity is a magical tool.

@Manda Gouvion It took me years to gain the courage to get into real estate. It's all about having that fire and not quitting no matter what obstacles get in your way. That didn't occur for me until I read Rich Dad Poor Dad during covid and my entire perspective changed. In a matter of 12 months, I have 3 units under my belt with the plan of purchasing one more in the next 2-3 months. 

To that point, I think you are asking yourself the wrong question. You should be asking yourself, did I nurture and lay the right foundation down for your fire / purpose to burn no matter what challenge is presented to you? If the answer to that is yes then jump in. If not, then keep educating yourself until you get to there. 

@Waylon Zook Not that I am aware of, but it is super easy to do it on a computer. Just click on the circled icon and grab it from whatever folder you saved it to.

Glad you worked it out. I've learned patience and common sense can cure most IT issues. :) 

@Jay Hinrichs - These pics were so worth the effort! Super cool. 

@Curtis Mears, @Steve Vaughan, @Dennis Burian, @Aigo Pyles, @Adam Martin, @Karl B. - Thank you everyone! Super good insights. 

@Shaun Robinson - I believe people have addressed most of these already but population growth, quality of schools, crime rates, diversification of job opportunity are all great criteria to determine a market. You can use city-data.com for a lot of this information and can even cross check property values and crime rate maps with certain areas which can help you find the perfect neighborhood. Best of luck on your search.