All Forum Posts by: Matthew Cyriac

Hey everyone super excited to BP and learn! My strategy is to Buy & Hold. 

So I have one rental which previously had been my primary residence. Here are the facts: 

• Purchase value: $280k, Current Appraisal: ~ $500k, current mortgage: ~ 200k, Rent - $2400, Mortgage (including escrow): $1300, Net Cash flow: $1100, I last lived there in 2018. So I need to make a decision soon if I am going to keep the house or sell it. 

1. If I sell it - I plan to use the funds to buy another rental. 

- Reasons for selling it, it's a long distance.I live in TX and the house is in CO and CO house market has been appreciating, so can generate enough equity for another property without the burden of a heloc/FEL.

2. If I keep it - I will need to pull out some equity to buy another rental (I know the limitations of pulling out equity of rentals - thank to BP :) ).  

- Reasons for this option, the Dallas market is just as hot, so still buying at an appreciated value and ability to use funds from HELOC. Of course, there's an increased risk/leverage as the rental needs enough funds to pay for the mortgage and pay the HELOC.

Based on the extensive experience on these forums - is one option better than the other? 

Is it common enough to take out HELOC to use it as a downpayment? Realistically speaking, the cash flow the current rental would pay for a good portion of the HELOC.

TIA

Hey @Jacob Rickel

I am sure your mom comes from a good place but 20% is not needed. There are a ton of mortgage options available for your primary residence without 20% down(FHA w. 3.5% down or many conventional loan options). With the conventional loan options you can have a PMI or loans where you can roll-in the PMI into the loan. To choose between the two conventional, the determining factor will be how long you plan to keep the house.

Now, you do need to show income to be able to afford the payment.  Good luck! 

Hi there, 

Based on the newbie introduction - others wisely recommended that I line up my finances before property. So, I have one rental which previously had been my primary residence. 

I have been in contact with Navy Federal Credit Union who will allow HELOC or Fixed Equity Loan (FEL) upto 70% on the property. This will provide me the adequate capital for another rental property.

Based on my understanding, the key difference between Heloc or FEL is that with FEL it's a fixed interest rate on amount withdrawn whereas HELOC you have option to draw down as necessary but it's variable interest rate. If I am using the funds for downpayment, I think a FEL would be better since the rate would be fixed. Would you agree or am I missing something? Should I consider HELOC instead? 

Thank you in advance! 

Matthew

Thank you, I am also going to try to be there. 

How would you go about doing this? I don't need the rent for the DTI calculation but not sure how I would do this without providing false information to a bank.

Very helpful to know, so would you recommend that I start the HELOC process even if I don't have a property (or even a location) picked out yet?

Thank you, 

Matthew

Hi @Virginia Schilling, I used to live in Denver and did house hack for a couple of years and it helped a ton. I agree with what others have shared and it can be a great way to build equity. I think there are several ways to flush out the scenario. Boulder is pricey but with the UC-Boulder and job market - it's an area where the values have continued to go up. I used to live in Broomfield and some of my neighbors used to commute to Boulder and another option is Golden. 

You have a lot of options and you are in the driver's seat! 

Good luck!

Matthew