1st Time Landlord To Be Needs Advise
Hi! i just found this site and have been browsing some of the posts. I need some advise.
I would like to purchase a 2 family home in NJ for investment purposes. My own NJ home is almost paid off. Should I take equity out of it for the down payment on the 2 family or finance the whole thing? Advantages? disadvantages? I know this is a lot of questions sorry but Im new to this.
Depends on what's the better deal for you. If you can get a very low equity line with the bank that is fixed, then do that...if not then finance it and make sure you work with a couple mortgage brokers to find you the best deal who work with investors...that will be your best resource.
Obviously you are going to want the best rate per month so you have maximum cash flow.
Personally, I'd open up a big line of credit against your house so that way you have instant access to funds in case you have to pull some out in emergency.
Good luck,
Christian "The Solutions Kid" Beebe
[addsig]
Some people are uncomfortable with leveraging thier own house for investment purposes. But let me tell you, you will receive a better discount on the mortgage than if you received Investor Non Occupied financing.
If you can put 30-40% down on an investment property with the funds coming from your equity, not only will you not have to pay Mortgage Insurance, but you can negotiate a low rate.
This might be a good decision.
I'd use your home line of credit for 20% of the purchase price.
That way you'll avoid mortgage insurance and get a great rate on your down payment, and a competitive rate on your investments. Find good deals that cash flow and you can buy 5 houses just like the one that you live in easily.
curlyjbs-
Using the equity line is a great way to go. You have instant cash and can get decent rates. I have used this before as a down payment on a rental that cash flows pretty well.
You can also do this.
Get a HELOC on your property for 20% of the purchase value of the new property (avoiding PMI). Then after the close of the new property, take out a HELOC on the new property for the amount of the down payment and pay back the HELOC on the old (if you want).
This allows you to 100% finance the new property without PMI or leveraging against your old property.
I have a 100% duplex finance program, so you don't have to pull any money out of your house. See my profile for contact information.