All Forum Posts by: Callie Brown

You won’t need a contact, they’re very accessible. Before we applied, we just called their customer service to ask all of our questions and they were actually really helpful and took time explaining options. Later, we applied over the phone and sent documents online. 

P.S. Make sure you don't say the HELOC is for "business" purposes. You can just say it's for improving the property or similar, but they won't let you get a HELOC to fund your "rental business."

We used PenFed in May and it was relatively painless. Everything went according to schedule and the process was pretty easy. We did have to pay for an appraisal because they weren’t able to run a computer-based one (said the numbers on the comps were inconclusive). 80% ltv

We are wanting to pull some equity out of our rental unit to use as a down payment on a second property. We are having some difficulty finding lenders that will do a HELOC on our investment property. We have contacted several local credit unions and banks and they only do owner-occupied. So far, penfed seems like our only option. (I'm aware that TD bank and Wells Fargo do these, but based off reviews, it seems they're not worth the trouble).

Has anyone successfully done this and which lender did you use? Conversely, have you had any bad experiences (either with a particular lender or using a HELOC for down payment)?

P.S. - the property we want to tap for equity is located in NC, if that makes any difference.

Thanks!

Thanks everyone! We haven’t made a final decision but are planning on renting it out. I will still have a couple of years to decide if we are well-suited to own a rental property before capital gains tax go into effect. Here’s another question (but maybe this deserves a new post altogether): Do people suggest forming an LLC for just one property? Or does it not really matter until you have collected a few? What’s the best way to do this, if we want to buy some more properties down the line?

Thanks for all of your help so far! This has helped me to narrow down what I want. I definitely want to keep the unit as a rental if we can make it work.

@Randy E. I agree that it would be a shame to cash out now while there is so much potential for growth here in Durham. Your second paragraph really helped to put that in perspective, and I don't want to move all of my eggs into the Kingsport basket. Who knows, we may end up in Kingsport forever, but I know the house we buy now would not be our "forever home," so there's no need to max it out.

@Thomas S. Can you explain why you think the rent is too low? I'm new to the game so I don't understand the reasoning. From my understanding, our unit has the potential to be a great investment property. 

@Emily C. We would definitely like to build our portfolio and I agree, we could always sell later if investment properties don't turn out to be "our thing." I'm also trying to be cautious about the home we select to buy in Kingsport as far as resell value, etc. (For me, it's sort of a trade-off - I HATE renting, so I'd be okay paying a little more in the end if it means I don't have to answer to a landlord.)

As for the HELOC, I need to read more about that, but from what I understand, I'm now starting to think that it may be risky to put that much of our equity from the Durham unit (a strong market) into a house in Kingsport. @Eric Weireter maybe a HELOC would be better suited for when we are looking to buy an investment property in a better rental market?

@Matt Castle, 1) We spoke to our current mortgage lender and she told us based on our numbers, we could be approved for a second home. We also got a pre-approval through an online lender, but this is based on the fact that we will have a tenant in place (the timing could be tricky, but doable). 2) I googled NC FHA specifically and haven't found anything yet, but I think since we have occupied the house for 5 years now, we will be in the clear. 3) Yep, our neighborhood has a big mix of owner/renter. If you know anything about Kingsport as far as good areas to buy/areas to avoid (or any other info you think helpful) I would really appreciate that.

I think we could get 1500 for it based on other units in the area (3 br/3.5 ba). Currently, mortgage (includes insurance and property tax) + HOA is 1150, property management fee would be 10% of rent.

Hello all! I am brand new to posting on the forum but have enjoyed reading your posts to try to learn more about investing in real estate. I have a question that I'm hoping I can get some advice on - we are very new to the realm of rental properties so I'm sure there are glaring flaws in my thinking that need to be pointed out. 

So, we currently own a townhouse in Durham, NC. Husband was just offered a job in Kingsport, TN, we are taking the offer, and it's a significant increase in pay (basically doubles our meager combined annual income). We would like to keep our townhome and rent it out, but aren't sure if that makes the most financial sense.

We bought the townhome for about $145k in 2013, currently have just under $127k left on the mortgage, at 3.5% interest rate FHA. (We fortunately closed right before they changed the rules about MIP on FHA loans, so ours will be canceled in a couple of years once we reach 20% equity, or earlier if we refinance before that). Based off other units in our neighborhood that have recently sold, we could get anywhere from 185-205k for it. We both have 800+ credit scores, but don't have much saved for a sizable down-payment on a new place. The way I see it, we have three options:

• 1: Sell the townhome, use part/most of the profit for down payment on new home.
• 2: Based on new income (106k base), we can afford to keep the townhome and get a mortgage for a pretty good house in Kingsport. With this option, we wouldn't have enough saved for 20% down payment, so we'd probably have to have PMI on our loan.
• 3: Do a cash-out refinance on our townhome, use that money as down-payment on new home. This would allow us to refinance into a conventional loan and cancel the mortgage insurance, however, we would lose the awesome interest rate of 3.5. (I also feel like it could be difficult to find a lender who wants to work with us on that, maybe I'm wrong?)

Does the answer seem obvious? I keep going back and forth on what is the wisest decision. We would love to keep it as a rental, as this area is exploding (especially with possibility of Amazon AND Apple coming to the Triangle), so rent would likely increase in the area soon and steadily. It seems the easiest way to ease your way into investment properties is to convert an existing home. We wouldn't be able to profit much at first, but would be able to cover the mortgage and expenses/emergency savings. But potentially walking away from 60-70k would be hard to do, too.

Let me know if I can provide any more information, I'm really looking forward to any advice you have to offer!