Real Estate Investment Advice?

Question

I currently own 3 homes in Pennsylvania (Rentals), all on separate
mortgages, averaging an over all equity amount of $89k. I want to
continue to purchase more investment properties, but want to avoid paying
cash out of pocket for the down payment and am currently considering a
HELOC for that purpose. My question is 1: Can the HELOC combine all 3
properties to determin the line? 2: What may my maximum limit be? And
3: How do you feel about this strategy and can you offer advise on
more saavy ways to invest in Real Estate?
Thanks!

Answer 1

You will get better rates, and have a more stable defendable financial position, by keeping mortgages separate.

HELOCs on investment property have rotten rates, especially if you (like most rental property investors) have issues due to the 25% vacancy allowance.

In most cases, rates are based primarily upon your creditworthiness and the maximum CLTV of that particular property, rather than absolute dollar value of equity, although smaller loans will have higher rates.

Quite frankly, you are likely better off taking a HELOC on your own residence for down payments, unless it is contra-indicated for some reason (talk to your tax and financial advisors). The rates are generally significantly more favorable, despite investment property's direct charge against revenue, and most folks have more room, under CLTV guidelines, on their personal residence. Then you can concentrate on paying it off/paying it down so you can buy another property.

There are any number of reasons why this answer could change based upon information you haven't given. After you talk to your tax person and financial advisor, site down with three or four different brokers and see what kinds of strategies they can suggest.

Answer 2

Combining your mortgages, does not seem advisable, for a good number of reasons, however at the stage that you are at, most financial institutions will want to cover their risk by blanketing your properties as security for the next stage of your plans. you may be able to get awy with it one or two more time before they will start treating you as a higher risk and demand all kinds of inter alia coverage (blanket security)

My advise is to search for a great mortage broker , with a personal portfolio of real estate investments. this would be a key criteria for all your allied resources (lawyers,Realtor, Accountants, Handymen, property managers, inspectors etc.)

They should be able to free up some of you equity and allow you to buy your next property.

As the markets are moving in your country, you may find better opportunities elsewhere, so let the numbers do the talking, do not get emotionally involved with the investments you are planning, set out a few ways how you want to do your deals

Buy fix hold, or buy add on and hold, buy fix sell, etc etc. then get creative with your financing with involving sellers, friends, partners and be sure that each property is paying for itself no matter what.

There are some many books, tapes and websites about investing in real estate that I do not know where to start, but one of the best as far as real estate investing as a business is Millionaire real estate investor by Gary Keller, it is about as bullet proof as it will get

Good Luck

Answer 3

Each real estate investment must stand on it's own. Never combine real estate investments into one loan. Use the equity/net income on all the investments separate in your financial when applying for a loan on new investments to minimize the personal cash used.

Answer 4

Never combine mo-rages never ..you can lose all...
you can buy little down "if you" can absorb the payments... if 1/2 your renters default

Answer 5

Read some tips on investment and more on this site