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HELOC on rental property
Posted on 10/4/24 at 7:01 pm
Posted on 10/4/24 at 7:01 pm
Say I have a rental property that is paid off and worth about $150k.
There is another property I would like to purchase for about $70k and do repairs. Would a HELOC on the paid off rental property be a good idea?
The new rental improvements would be about $30k, but I’d pay those out of pocket.
New rental would bring in about $1000/month if that means anything.
There is another property I would like to purchase for about $70k and do repairs. Would a HELOC on the paid off rental property be a good idea?
The new rental improvements would be about $30k, but I’d pay those out of pocket.
New rental would bring in about $1000/month if that means anything.
6
Posted on 10/4/24 at 7:29 pm to SaDaTayMoses
Seems pretty straight forward to do honestly.
Posted on 10/4/24 at 7:46 pm to SaDaTayMoses
I have a line of credit which uses a few of my rentals as collateral.
I used it to buy flip properties and fix them up.
I used it to buy flip properties and fix them up.
Posted on 10/5/24 at 8:14 am to ItzMe1972
Same.
Posted on 10/5/24 at 8:20 am to SaDaTayMoses
Is your HELOC already set up? They take some time to get lined up to be able to use.
Posted on 10/5/24 at 8:21 am to SaDaTayMoses
Have done exactly this. You have to keep the insurance on the collateral property at the value of the heloc amount, but that doesn't seem to be an issue with the numbers you shared. The only issue would be if the collateral property is titled in a trust. Banks prefer it to be directly in your name.
Posted on 10/5/24 at 9:41 am to Billy Blanks
no, it's not set up yet.
Posted on 10/5/24 at 9:41 am to KTiger85
Property is insured so no issue there. It isn't titled in a trust, directly under my name.
Posted on 10/5/24 at 11:46 am to SaDaTayMoses
You’ll need to get an appraisal so they can decide how large of a HELOC you can have. For me it’s 80 percent of the homes worth minus what I owe. So if I owe 100k on a 500k home, I can get approved for 300k LOC. Hope that makes sense. You’ll have some fees to pay but overall this is a great flexibility to utilize for some people.
Posted on 10/6/24 at 9:56 am to MrJimBeam
80% was same for me. Didn't have to get an appraisal, though. This could be due to purchasing the home within the past year, and loan value being less than the 80% approved for.
Posted on 10/7/24 at 7:42 am to SaDaTayMoses
Why not get a regular mortgage? Rates should be lower than a HELOC. Since you are using out of pocket money for improvements, your loan should match the value of the house.
Posted on 10/7/24 at 7:43 am to SaDaTayMoses
You may consider a cash out refinance option also, but usually there’s a minimum amount to finance like $80-100k. But you could refinance the entire amount you need and pay back some of the mortgage.
This type of thing is best to find a GOOD banker or loan officer to ask about your options. Some sort of commercial or small business loan may also be an option.
This type of thing is best to find a GOOD banker or loan officer to ask about your options. Some sort of commercial or small business loan may also be an option.
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