Equity Home Loans

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 put 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 put a down payment on another home that would be used for investment purposes? A rental property/duple/apartment complex etc.... Of course I realize 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 ideas when it comest to purchasing multiple homes for investment purposes. I understand a persons credit score tangible assets can be a determining factor but I have yet to build any considerable assets. I make close to $250K a year before taxes, would that alone be good enough for banks to finance me? P.S. - I live in the Dallas TX area and I am looking at properties averaging around $100K as rental properties. Just wondering if building up equity in homes would allow me to borrow to purchase.

Public Comments

1. Yes you can. I know investors that own property they rent and once it has some good equity they will use it and purchase another. I see this all the time Hell Donald Trump does it.
2. 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 other homes you are trying to purchase. 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 plan 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. Think of it as investment, not a continual source of income.
3. Many homeowners apply for home equity loan for a variety of reasons. While some want to utilize the money to get rid of unmanageable debt, others want to add value to their existing home by restructuring and repairing. Whatever may be the reason, the home equity loan<!--provides a homeowner the quickest and easiest means to get extra cash to meet unavoidable expenses.In many cases, lenders are too willing to offer you home equity loan for the simple reason that the loan is secured by your property. http://best-loans.awardspace.com/homeloans.htm The market is flooded with so many loan products from lending institutions that offer you excellent terms and conditions and leave no stone unturned to publicize their schemes on televisions and print-->All this may leave you feeling baffled and confused about which home equity loan product to pick. Before choosing which lending institution to go with, make sure to do some research. Shop online to obtain home equity loan quotes from different financial companies.
4. I am trying to give you the same answers others may have given but in my way. Yes, you can use your home equity to put as down payment for an investment property. But in that case, the loan available to you also declines. In either case, the total loan that is available to you will depend on your debt to income ratio. i.e. if you are making 100 a month, you can not have more than 41 a month as your payments. Some hard money lenders will allow upto 50% but charge you higher interests. In summary, use as much cash you can afford, and then borrow on equity. Alternatively you can use your IRA for short term...........If you make 250K per annum and aiming 100K homes you should be able to buy nearly 8 homes of 100K including the one in which you live. What is important as you have admitted, that you will have to start paying the very next month after you borrow. So if it is investment property and want to rent-out, you should be confident that you would find a tenant (who would pay you ~900-1100 a month), This includes your payments and taxes and other maintenence you may come across. Remember, every month your home is vacant, it is absolute loss!.
5. You can do everything that you've asked. Hey, I'm working for a new CPA firm now, popa. If you are still looking for someone to do your taxes, just let me know. I'm sure we could work something out.