Can you take out a home equity loan on your current home to put a down payment on an investment property?
Just wondering if I place a considerable down payment on a home and built more equity over a few years if it would be possible to take a home equity loan out to place a down payment on another home that would be used for investment purposes? A rental property/duple/apartment complex etc….
Of course I grasp that the home equity loan would need to be paid back but I was wondering if people out there do this on a regular basis?
If not can anyone give me creative financing thoughts when it comest to purchasing multiple homes for investment purposes.
I know a persons credit score tangible assets can be a determining factor but I have yet to build any considerable assets.
I make close to 0K a year before taxes, would that alone be excellent enough for banks to finance me?
P.S. – I live in the Dallas TX area and I am looking at properties averaging nearly 0K as rental properties.
Just wondering if building up equity in homes would allow me to borrow to buy .
That’s how I have done, but on a much smaller scale than Donald Trump. If you have cash use that first, if you use an equity line you pay the interest.
Investment property loans charge more interest. You want to try to maintain an 80% or less debt to value on all you propeties. If you go over you will have to pay more for the loans. Try to do this for your current residence too, in case you want to refi.
Loans are getting cheaper, check with your bank. They may have a refi option that will allow you the cash you need at a better deal than an equity line.
When you buy if you do multiple deals at once you credit won’t reflect the additional homes you are trying to buy . This will make you look like a better risk to the bank. Make sure you don’t bite off more than you can chew.
Another bit of advice, don’t buy a fixer upper and plot to improve it to gain value, not on your first endeavor anyway. Time is money, buy it and rent it out as quick as you can. Expect your profit in the future value of the home. Don’t expect much/any profit from the month to month rent check. Reflect of it as investment, not a continual source of income.