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New to investment properties, help!

I'm interested in buying my first investment property to rent out, I found a nice unit for around $165,000, have 15,000 for a down payment. Now if at 4.5% APR, it looks like my payments will be $931 a month. I plan on renting the unit out for $1200 + utilities. I would think that putting their entire rent check every month would be the most beneficial in terms or paying off the loan and reducing the amount of interest I need to pay. If I have a home (valued at 315k) with 60k worth of equity, should I take a HELOC out to put a bigger downpayment on the investment, or am I just swapping debt from one area to the next. It might be good, but I have no idea what the rates are for HELOCs. Any help would be most appreciated. by stanle_204_692 from Houston, Texas. Nov 22nd 2011 Reply


Marcus Buchanan (mbuchanan)
#313 ranked lender in California - 28 contributions

If you can put less down and get away with it, being that it will be rented out is the best way to go. Save the equity in your home for other things such as home repair and emergency funds. Most home equity lines of credit can be used as an open line of credit so you only pay on the amount your using at the time plus the variable interest rates on them are very low right now. Hope this helps. Marcus

Nov 22nd 2011
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Jeff Albrecht (Doctor_Mortgage)
#94 ranked lender in Texas - 77 contributions

Hello From Austin, Texas. The maximum "Loan To Value" (LTV) in Texas, is 80% on your primary residence. So if your home is worth $315,000 and you have $60,000 of equity, then you are already at the maximum LTV on your primary residence. You are on the right track, but if the $315k were $415k, then I would refinance your primary up to 80% at a new 30 year fixed at i.e. 4.0% (so you do not have the variable % rate of the HELOC to stress over.

Nov 22nd 2011
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

First off, if your purchasing an investment property, you need a minimum of 20% and preferably 25%. If you only have $15K for down then you will need to find more money if you plan on buying a 165K home. Also, when purchasing an investment property, you will need reserves in addition to the down payment.. based on the numbers above, you might want to consider a lower priced property if all you have is the $15K.. WilliamAcres.com

Nov 22nd 2011
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Rudi Hofmann (CaPortfolioLoans)
#282 ranked lender in California - 380 contributions

Loans are risk-based. The larger your down payment, the lower you rate and price. ... Happy funding, Rudi

Nov 23rd 2011
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