All Forum Posts by: Bharath K Raju

Thank you all for your detailed response. It is good to hear different perspectives. I enquired about the HELOC on the rental property and I am not getting good terms that work out. We are a family of 4 and options like co-living is not viable. Also, we are considering returning to India in 3 years to be with our aging parents. With limited time I have in US, I have some financial targets to meet, one being scale and increase my net worth. With that said, I am not going to make any decision in haste. I am talking to my financial advisor, who is an expert in this space to gauge pros and cons. I will keep you all updated on the decision and the progress we make. I might reach out to some of you for help. Thanks again!

Hi BiggerPockets Community,

I could use some advice on a decision I’m grappling with regarding my rental property located South Charlotte area (Ballantyne area, in NC 28277). Here are the key details of my situation:

1. Rental Property Details (Note: This was our primary home till 2017):
   • Current Value: $970,000 to $1M
   • Primary Mortgage Loan Balance: $505,000 (@ 2.6%)
   • Took Home Equity Loan on this house to make down payment for my current primary residence.
   • Home Equity Loan Balance: $123,000
   • Total Loan Balance: $628K (Primary Mortgage + Home Equity Loan)
   • Rental Status: Occupied
2. Primary Residence:
   • Purchased in 2022
   • Mortgage Rate: 7.3%
   • Current Loan Balance: $650K
3. My goal for 2025 is 2 fold: 
   • #1. I am interested in paying off my loan balance on my Primary house ASAP as I pay a pretty heavy Mortgage every month. What hurts me most is that most of my payment portion is going towards Interest. I paid almost 40K in interest last year. 
   • #2. My wife and I are very interested in investing in another property as we are eager to expand our portfolio. We are considering a fix and flip or a BRRR.

Options I'm Considering:

• Option 1: Upgrade my rental house at 28277 and sell the rental property at a premium. If I upgrade my house, I can sell it for ~$1.2M. I could use the proceeds to to pay down a good portion of my mortgage on my Primary residence (that is currently at 7.3%). And I could use additional 200K or so to fund my next investment property. 
• Option 2: Make minor upgrades to the rental property to increase the rent (the current lease is almost ending) and hold onto it. The South Charlotte Ballantyne area is one of the most sought after neighborhoods in Charlotte and there is significant growth potential in the next 4 to 5 years. If I hold this property, then I will have to figure out a way to leverage the equity in this property. I think I could get a HELOC for $150 to 200K.

Key Questions:

1. Would it be more financially prudent to sell the rental property and pay off a chunk of my high-interest primary mortgage (7.375%), and use the remainder for a fix and flip?
2. Alternatively, should I focus on making minor upgrades to the rental property to increase the rent and continue holding it, considering the neighborhood’s growth potential?
3. Given my inclination to keep the rental property, what are the potential benefits or drawbacks of using a HELOC on this property to finance another investment property?
4. Would banks typically provide a HELOC on an investment property, and if so, what terms should I expect?

I would greatly appreciate any guidance or experiences you can share to help me make an informed decision. Thank you!