How to finance?
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How to finance? (by Andre [CO]) Jun 13, 2019 1:45 PM
       How to finance? (by NE [PA]) Jun 13, 2019 2:16 PM
       How to finance? (by razorback_tim [AR]) Jun 13, 2019 2:24 PM
       How to finance? (by Landlord ofthe Flies [TX]) Jun 13, 2019 2:52 PM
       How to finance? (by Pmh [TX]) Jun 13, 2019 5:52 PM
       How to finance? (by Robin [WI]) Jun 14, 2019 6:22 AM
       How to finance? (by nhsailmaker [NH]) Jun 14, 2019 6:42 AM
       How to finance? (by Nicole [PA]) Jun 14, 2019 10:15 AM
       How to finance? (by Landlord ofthe Flies [TX]) Jun 14, 2019 5:03 PM
       How to finance? (by Ray-N-Pa [PA]) Jun 15, 2019 6:30 PM
       How to finance? (by Pmh [TX]) Jun 18, 2019 6:46 PM
       How to finance? (by Andrew [CO]) Jun 21, 2019 9:35 AM
       How to finance? (by Eddie [KY]) Jun 24, 2019 7:34 PM

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How to finance? (by Andre [CO]) Posted on: Jun 13, 2019 1:45 PM

I have property I own free and clear in Fort Wayne In. I would like to use this property to help purchase another property.

I was hoping to make a new purchase all cash if I can pull money from the Fort Wayne property (worth about 140K) and a HELOC on my personal property.

Once purchased, I would get a mortgage on the new property to pull cash out and pay back the majority of the money I borrowed.

Seems like it's tough to find HELOCs investment properties. Or is it better to pull cash out with a normal mortgage?


How to finance? (by NE [PA]) Posted on: Jun 13, 2019 2:16 PM

Just for clarification, you're not paying cash. You're pulling money out of two different properties to buy a new one to refinance and pay those back. You're basically just playing musical chairs with mortgages.

Nothing wrong with that in my opinion, so go set up a line of credit on your Fort Wayne property.

Why don't you just scrounge up enough money for a down payment and get a commercial loan on the new one? Probably a lot less work. --174.201.xx.xx

How to finance? (by razorback_tim [AR]) Posted on: Jun 13, 2019 2:24 PM

Assuming you have good credit and enough cash flow/income to cover the debt service you should be able to easily obtain a line of credit against your free and clear rental property. Stay away from the big-name banks and look for a local or regional bank in the Ft Wayne area. You will need to talk to commercial loan officer - not your secondary market loan officers. --70.178.x.xx

How to finance? (by Landlord ofthe Flies [TX]) Posted on: Jun 13, 2019 2:52 PM

From a risk standpoint, I'd leave my personal residence out of it. If something bad happens, you lose 3 houses instead of 1. Bit too risky for my blood especially if I had to put my wife and kids out on the street if we were to lose the home. Plus, what happens during refinance if home prices drop. What if the value of the new home doesn't cover the other loans? I'm thinking market prices will in a year or two because they can't continue to climb forever and we're seeing slowdowns.

What if you sell the free and clear house and use that to fund two houses of equal value and have 50% mortgages on each? Less risk because the houses have more equity.

How to finance? (by Pmh [TX]) Posted on: Jun 13, 2019 5:52 PM

not sure I follow logic. why not just finance new property from the get go ? you are just moving around the deck chairs with your proposal. if it canít be financed now why do you think it can be later ? I do not follow LLFlies thought that values could fall during finance process. they could also go not sure that should hold you back. My financings have always been done within 30 days.

How to finance? (by Robin [WI]) Posted on: Jun 14, 2019 6:22 AM

Huntington Bank offers a LOC on rental properties. Some other smaller regional banks may as well, but they're few and far between.

The advantage of a LOC is that you're not paying interest if you're not using the money. Upfront cost is low, interest rates are higher.

If you take out a mortgage, there will be a TON of paperwork, there may be significant closing costs, it will take forever, but the interest rates are lower. The bank will not be happy if you pay it off quickly.

How to finance? (by nhsailmaker [NH]) Posted on: Jun 14, 2019 6:42 AM

You clearly need PROFESSIONAL financial advice

seek help from those that do this for a living

Do it now - do not wait a week

How to finance? (by Nicole [PA]) Posted on: Jun 14, 2019 10:15 AM

interest rates are very low. saw 2.875% on an owner occupied earlier this week. 15 years. $5697 origination charges.

other products with lower costs are in the low 3%s right now with 10 year terms.

How to finance? (by Landlord ofthe Flies [TX]) Posted on: Jun 14, 2019 5:03 PM


Sorry I wasn't clear, I didn't mean prices fall during the financing process. They lock in rates and only do one appraisal so it's really no big deal if they did. The point I was trying to make is that I assume the reason the new house can't be financed as is, is because it needs a lot of improvements. My concern was that if he bought now, and fixed it up and 6 months or 1 yr later tried to finance it, the prices could have dropped or the repairs could have been excessive and they couldn't refinance it enough to cover all the costs.

How to finance? (by Ray-N-Pa [PA]) Posted on: Jun 15, 2019 6:30 PM

It is good that your home is worth 140 in Indiana, but how much debt will the cash flow support?

Equity is good.....but it doesn't buy groceries

Cash flow does.

How to finance? (by Pmh [TX]) Posted on: Jun 18, 2019 6:46 PM

so like a bridge loan. borrow & put equity into it (rehab) then refinance. we do this with hotels & also do earn out laddered loans. if the potential cash flow & return of cash on cash pencils out I would pull equity from other properties to do. we have done cross collateralized loans also. but that was in the early time of the Great Recession but a good time to buy. even then we had flexible lenders who had private capital investors. My first properties were bought with down payments by loans from my 401k. would I do a heloc on my own home. Absolutely.

How to finance? (by Andrew [CO]) Posted on: Jun 21, 2019 9:35 AM

Thanks for all the thoughts. I like the HELOC's because of their flexibility in case I need additional funds for rehabs.

I understand the musical chair thing. Why not just get a new loan? For one, I do not have the 20% down payment that seems to be needed for investment properties. Also, I guess my reasoning on using HELOC's was that I like the ability to pay cash for something. I feel like it would give me an edge on purchasing a property where the seller just wants to get out.

Agree? Disagree?

How to finance? (by Eddie [KY]) Posted on: Jun 24, 2019 7:34 PM

I think you are wanting to be able to make a cash offer to get a better price. You need see a small local bank or credit union.

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