I have a newbie question that I’m just not too sure about.
If I purchase a duplex at, for example, $90,000 and was appraised at $120,000, how would I go about using that $30,000 for a down payment for another property? Would I be taxed on the $30,000 in the process?
you can get a home equity line, or refinance for 100% of the value depending on the situation either option would work.
Ok I have a better senerio:
I find a property for $110,000 ARV and purchase it for $75,000…
Should I obtain 100% financing for the property since the LTV would be at roughly 70%? Is this type of financing easy to obtain?
NOTE: I’m looking to do this for rental purposes.
You would not be taxed on the $30,000. When you sell the property if you sell if for more than the $90,000 you paid for it, then you would be taxed.
You can get 100% financing on NOO investment properties, but refinancing at 100% for NOO properties is becoming more difficult. You need to have 6 months PITI and a good credit score. Also you will need to shop around for a lender that will do 100% NOO. I bought a NOO property for $61,000(100% of sold price) and then refinanced at around $95,000 (100% of appraised value) a few months later and pulled all the money out. This is harder to do today, the lender I used no longer does this type of loan.
When you buy the property in your second example your lender can pull the equity out of the property and use that to put down on the new property you buy.
"When you buy the property in your second example your lender can pull the equity out of the property and use that to put down on the new property you buy. "
Is this relatively easy to accomplish with a lender?
It is difficult to refinance at 100% of the appraised value on a NOO. But if you want to refinance at 80% or 90% than that is far less difficult and most lenders can do this. It is just when you try and refinance a NOO property at 100% of the appraised value that is difficult, and maybe even close to impossible today.
You are going to want to try and buy at zero down or as close as possible. If you can’t buy at zero down, then your idea would work. In the beginning you do what you can do to get it done.