I currently own two investment condo units. Each is worth ~60K. I owe no money on either and NOI is $5000+ on each. I currently have an equity line on each (80% LTV on one and 90% LTV on another). I owe no money on either line. The terms of both are IO payments with a rate of 9-9.75%.
I’d like to potentially use equity from one or both of these properties for a future deal and would love to hear some ideas about loan programs, ideas, etc. I’m not sure what other kind of loan structures (other than the lines) are available. I like the fact that the lines are a “renewable” source of capital, but am not crazy about the rate.
Is doing a cash-out, conventional 30 year mortgage possible? What kind of rate would be realistic? LTV?
As you owe nothing on either property, there is nothing preventing you from getting a 1st lien on one or both of the properties (unless there are title seasoning issues or some other concern not mentioned).
What type of loan you use to separate the equity from your other two investments is dependent on how long you intend to borrow the money…
If you keep the LTV to 70-80 on the cash out, you should get an attractive rate with only proportionate effect on cash flow using a 30 year fixed.
The trade off for this approach are closing costs and speed to funding (HELOCs offer a low cost of entry and close in the 1/3 of the time a regular loans needs).
Given that down payment is not an issue for you, maybe you should locate a property that you’re interested in and then evaluate your options. I would generally recommend that you evaluate the financing before “shopping” for properties but in your case, the property may have a large role in what type of financing you pursue. It depends on whether you’re looking to flip or hold the property; that, among other things, will help you decide if the rate is really an issue or not.