Turning My Home Into A Rental??
Hey everyone,
I currently own a home with about 157k in equity. I need more space and want to use some of this equity to by another home and keep my current as a rental. Will the following scenario work?
Take out an equity line (I'll need about 50k for a 10% downpayment on the other house, maybe I'll go with 5% and do an 80/15/5 whatever). My current home can net me about $800 to $1000 in monthly cash flow. I'll need that cashflow to help qualify for the other house. Will I need to go to my lender with a signed lease? Is there anything more I can do to help this deal happen?
Thanks in advance
Jeff
First you mention that your property has 157k in equity. I'm assuming that the property is worth more than 157k which tells me that you aren't getting much out of your home as a rental.
Because of this, I would seriously consider selling the property. If the extra $7200-9000 yr income that the bank will consider (75%) will make or break the deal on the next house, I would probably say you are trying to overleverage your current house.
You should seriously consider you goals in life and decide what is best for you.
GOOD LUCK
Thanks for making me think. Yes, my current prop is worth about 400K. I have a $1400 a month mortgage expense and can rent for between $2000 and $2400. That seems like good cash flow for a rental. No? After speaking with my lender the rent that a lender will consider (75%) will basically be a wash and I'll need to qualify on my salary. I want to keep that first home which is in great area that should continue to see very good appreciation over the next couple of years. Seems like after the deal is done I'll have a house with about $82K in equity and good positive cash flow plus a home that I can grow into financially with my sales career or other REI. I'd appreciate more objective insight given this additional info.
Thanks.