HELOC
I am currently looking at a home listed for 100k. The listing agent has indicated that the seller is extremely motivated to sell. I had my appraiser run comps for me and he came back at around 130K. Before every refinance I have my appraiser run comps so that my clients and I will know that the deal is viable. Historically my appraiser’s comps are low to insure that he does not have to put his foot in his mouth down the road.
With this knowledge I’m estimating the value at 135k-140k.
Problem is that I’m new to investing and I am a little fearful of getting into a financial quandary. I was thinking of getting a HELOC after closing. Worst case scenario, I use the equity funds to cover PITI and the line of equity.
This would insure that I would have the necessary funds available if I could not rent or flip the property in a timely manner.
I have very little capital to spare if I get into a jam, so I’m looking at a safety net.
Is this scenario a good Idea? Are there any other means of taking precautions? I have not really been formally educated in investing. The only knowledge I have is based on my mortgage experience.
You may want to ask you local Realtor what average DOM (days on market) are for properties in that area. That will give you a genarl idea of your holding period. Depending on sellers' circumstances you may ask : 1) for permission to advertise while it is under contract,a dn before the sale is closed, 2) for a longer holding period (90/60 days vs. 30 days)
Thanks for the info. It's kinda funny how your own finances cloud your vision.
I've recommended the exact advice you gave me to others but did not even think of that route.
Thanks again