Newbie Starting
:-? Newbie question here.
Right now I want to take the equity in my home to invest it into a rental property. My scenario is that I have a house valued at ~$525k. I have ~ $325k in equity with a rate of 4.25% for about 9 more years.
I am trying to figure out my best scenario for my 1st investment and financing.
1. refinance my house, probably with an interest only loan; stay in my current home and use the equity I take out to purchase a single family rental... or
2. take out a home equity on my current house; purchase a house to live in, rent out the house that I live in right now and sell it within 3 years to avoid capital gains (live in house 2/5 years)
I am not sure what would be the easiest/ which type of loan would be best to pursue. Any help is appreciated. Even if someone could direct me to the best site for a realestate financial calculator that could assist me with a comparison of the scenarios. Any better ideas?
I hope this was posted in the best area.
There is a package in the MYTOOLBOX area of MYTCI called the PROFORMANATOR. I also suggest that you learn to do these calculations on your own using a spreadsheet since it will help you learn.
Your choice of loan should depend on your RE market and your plans. It sounds like a Home Equity Line Of Credit (HELOC) on your personal residence might be attractive since you have a good rate on your primary loan. Keep in mind that interest rates are currently headed up so you might want to have a strategy where you pay off the HELOC relatively soon.
Hope this is some help.
Regards,
Ed