Use HELOC for a Down Payment on an Investment Property - Good Idea?
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- Опубліковано 12 вер 2024
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In this video I share with you how you can use a HELOC to buy rental property and other forms of investment properties and real estate, and I also discuss whether it is a good idea or a bad idea to use a Home Equity Line of Credit as a down payment.You can use a HELOC for fix and flip investing, you can use it as cash, or you can use it as a down payment on a higher priced investment property.
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Man ,what are you talking about?If you put a down payment on a 500,000 house which is 100,000 then you turn around and renovate for 100,000 you are in debt for 200,000,so where is the profit sir?And you sell it for 700,000,where is the profit?
Let me see:
-500,000.00 house
+100,000.00 down payment
=-400,000.00 finance this w bank
-100,000.00 renovations cost
=-500,000.00 total money spent
+700,000.00 sells for this much
=200,000.00 profit and if you file a 1031 you can put towards next house tax free
THANKS. Just what I needed to watch. My wife and I got a 400k HELOC from our 780k primary home which we are still paying a mortgage for. I want to only use 200k for this new duplex down payment. I realized that the secret to making millions is making better investments and staying out of debt.
I'm grateful to GOD for the internet space, we were able to join the credit repair program, we payed up our debt and now we are back to being the administrators of our farming business and our own properties, as well as small pensions. I am almost 56, my wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn using Airbnb and retire comfortably.
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Hi. I'm thinking about using a HELOC to purchase a mixed-use buy & hold rental property that requires quite a bit of renovation. Right now looking at different banks and doing as much research as possible.
Go for it! Make sure your number work in this market though. DONT rely on rates dropping. Thanks for watching.
Did you ever do the heloc ?? And was it worth it ?
Do Not use a HELOC unless you're going to flip the home and sell it for a profit so you can quickly repay the HELOC!! If you have good credit and more income than debt, just get a signature loan - they're easy, no paperwork, no proof of income, no waiting for 30-45 days for approval - you'll get your money in about two hours. The interest rate is about 15%, which is about $750 a mo. for $30k. The term is only 5 years, and you can always pay it off early (after you flip the house). Be smart, don't risk your main home.
Good advice and I agree. Thanks for watching!
Would like to know more about a signature loan also
So if I want to use Heloc for down payment, it would only make sense if I bought a ran down home with huge renovation potential otherwise the assumed value increase wont be enough to pay the heloc back after BRRRR?
The other problem is that you or your uncle Earnie need to be a contractor because paying market rates for contractors for renovation probably so expensive that you can never just add that cost on the top of the buying value as is.
Hi. I'm thinking about using a HELOC to purchase a mixed-use buy & hold rental property that requires quite a bit of renovation.
Let us know how it goes!
Just what I needed two hear
Glad you enjoyed it Thanks for watching
Say an investment condo property would cost me $85K to buy. Should I get an 85K HELOC to pay the entire amount and use the monthly rent to pay down the loan? It may take years to pay it off though.
Does it need to be renovated? If yes, use heloc to buy, renovate and then cash out refinance. If not, just get a regular mortgage.
@@JayCosta So essentially buy it, whether turn key or renovation needed, then instantly cash out refinance to pay it back (or at least most of the HELOC?)
What's the usual turn around time? I'm looking into pulling out max HELOC, buying in OH (I can't afford CA where I'm at), then cash out refinance. After I lock in a mortgage hopefully cash flow $100-$300 and hold the property.
Gonna be my first property if I pull the trigger. Thank you very much for the concise video!
You're welcome. I will be making video in out of state investing soon
I’m closing on a home that I bought from my mom. 100k was the price appraised for 350k what should I be doing with the equity. The property doesn’t need work it’s more or less my inheritance.
I would just cash out refinance and invest that money elsewhere.
Hi Jay, I am considering using a heloc for a down payment on a long term rental property. I need ~$50k for the down payment. I have $50k in cash in a savings account that I could use for the down payment. Would you use cash if you have it for the down payment or would you still use a heloc to keep your cash free up. If I get a renter right away and the rent can cover the mortgage and my heloc, then I think the heloc is a good route. But, if not, then perhaps cash is the better option. Thoughts? What would you do?
Long term, why not use the cash? Unless you plan on rehabbing the place and cash out refi after, I would use the cash. Let us know how it goes.
im in the process of getting my heloc to buy a townhouse that i’ll be renting by room. i just need to go for it 😬
Why not conventional mortgage on something long term? Thanks for watching!
I have a home fully paid and a second home I use as a rental property. I wanted to get a Heloc to use as a down payment for another long term rental property. I understand the variable rate and rates are high right now but since I really have no expenses I wanted to get the home and rent it out. I understand that I may be paying out of pocket for a while but eventually the rent should take care of the property. Do you think this is a good idea? Also I work at a hospital full time and make 6 figures a year.
Only use a HELOC as a down payment if you are planning on renovating, renting out, and then pulling a cash out refi. Thanks for watching and for the kind words.
I need to know if this is financing that I need to use or not (line of credit), I'm gonna be ramping my revenue ASAP as a new contractor installing windows and doors, I've got a property I'll buy in the immediate future, Is it blow or no show? please let me know why otherwise thank you. Multi-family rentals
Are you asking whether a HELOC is "use it or lose it"? Haha. Anyway, no you do not have to use it and if balance is $0 it doesn't cost you anything. Thanks for watching!
Hey Jay,
Hoping you see this!
When using a heloc to purchase a fix and flip, is it smarter to borrow the minimum amount to secure the house, or borrow the amount needed to pay for the house out right?
When it sells, you would pay off either the mortage on the property you bought, or the heloc!
Whats your thoughts?
Thank you
The more you borrow, the more risk you are taking, but either is OK as long as you have an exit strategy. Just have to weigh your risk tolerance! Thanks for watching!
Im thinking to use a Heloc as a down payment to buy my grandparents house the house needs works about $20000 of work. Down payment is $33000. The house I’m buying at a low 125000.
What do you think is a good idea
My current home value is $260,000 I owe $130,000.
My grandparents house would be long term rental
I would not use HELOC as a down payment unless you are selling or cash out refinancing at the end after renovations. Thanks for watching! God Bless.
So basically DONT DO IT!
Depends. Thanks for watching!
Makes perfect sense.
Thanks for watching
thought about getting a heloc for a comercial real estate property I will be leasing in NJ. where in NJ are you located?
Hi, I am in Bergen County. You can email me at costajay@gmail.com
I have my first home paid off, but I want to use my equity to use as a down payment for my son. How can this be done?
A fixed home equity loan or cash out refinance for a small amount would be better in this situation than a HELOC. Dont treat a HELOC as a 30 year mortgage. They are variable with rates and can be called by the lender at any time. Which makes them great for short term but not good for long term.
Hi I was thinking of going the HELOC route to buy a primary residence and put my current primary on rentals . Your video tells me I cannot take HELOC to make down payment on primary residence? Can’t I show funds from HELOC to the loan officer?
Depends on the lender and what type of loan you are getting, but most of the time No, at least for a primary residence. Thanks for watching!
I have a stupid question, why not saying you buying another single family as a investment property, and move in shortly after? You are allowed to move as you please right? I’m only asking because I’m on the same boat. I have a heloc on my 2 family and want to buy and move into a 1 family. But can’t I say, I want that 1 family as an investment property? Is this fair to ask?
Yes as long as your DTI is still OK you should be fine. Thanks for watching
I currently own a townhouse in Central New Jersey where rental rates are notably high. I'm considering moving out of my townhouse and taking out a Home Equity Line of Credit (HELOC) to help with the down payment on a new house. I plan to rent out my townhouse after moving down to south jersey. Given the limited housing inventory in Central New Jersey, I'm thinking about relocating to South Jersey. My goal would be to repay the HELOC within two years by selling the townhouse. Is this a good strategy? I really want time to move out slowly.
Do you recommend a home equity loan as opposed to a HELOC for buy/hold rental properties?
yes HELOCs should not be used long term. They are variable rate loans and should not be treated like a 30 year mortgage. Thanks for watching!
So what about for short-term rental property investment? Best method for down payment using my home equity?
What do you mean "short term rental property"? Usualy rental property investing is long term. Explain further so I can try to help.
In regards to your question 2 You recommend using HELOC for short term or fix and flip but if I want to buy an investment property and use it for AirBnB. The returns are higher sometimes double than long term rentals however I know no guarantee but you mentioned you don’t suggest for buy and hold. So my questions refers to if you don’t recommend using HELOC for buy and hold. Then what would you recommend so I can buy an investment using either my equity or any program for down payment for investment property?
Cash out refi your primary residence. Use that as down payment. I wouldnt use a heloc for a down payment long term
Hows the market in New Jersey?
off from the peaks for sure but has held up somewhat stable. Where are you located?
Can you explain using a home equity loan vs HELOC
Check this one out that I did a while back. ua-cam.com/video/zEFnNyo39MI/v-deo.html
Can I use heloc to buy Mobil home and rent it
I dont see why not, but make sure you have an exit strategy. Thanks for watching!
I want to use my heloc to buy a investment property in full, then do a refi RIGHT AWAY & pay my heloc back less the 20%
I'm using heloc from investment properties that are paid in full
That sounds like a great move. Short Term and you have an exit plan! Keep us posted on how it goes.
Hello, i am in the process of taking out a heloc to invest in a long term rental property but one question that i am asking to my self, is it the right time to buy a property for investment(with no renovation investment in it )? Or should I wait for properties to drop at least 30% of their value? So I can have some meat as cash flow so I can pay for the heloc interest payment and add extra money to pay for the heloc’s principal. To do this as fast a posible maybe close to two years. What do you think?
I dont know the future, but if you wait for a 30% drop you will never get started. If it is long term, I would suggest a normal mortgage for the fixed rate. Thanks for watching!
Banks to use for a heloc on a rental property?
Check this video out: ua-cam.com/video/azz-sj84iVc/v-deo.html
Can I do a cash out...if i don't have a mortgage ?
yup
I applied for HELOC with two lenders. I was assuming they would be interest only in the draw period. That turns out not to be the case with them. How can I check out the terms without submitting an application that ends up dinging my credit.
I would just ask them. Every HELOC I have seen is interest only during draw period. Care to share which lenders? Thanks for watching!
Could the investment property be located in Punta Cana, Dominican Republic? I just need $60k perhaps to pay it in 5 to 10 years.
I'm not interested in a cash out refi as i currently have a low interest rate
dont know anything about HELOCs in other countries. Sorry.
@@JayCosta i was asking doing the HELOC in NY for a property in Cap Cana, not a HELOC abroad