how to finance - Posted by Valerie

Posted by Mrs SD on October 26, 2000 at 17:02:32:

Who offers 90% financing to non-owner occupants, banks or hard money lenders?

Mrs SD

how to finance - Posted by Valerie

Posted by Valerie on October 25, 2000 at 21:31:16:

I am looking for an investment property and have spoken to a lender and would be approved for a 100,000 mortgage, possibly more. However, I have more than 250,000 equity in my primary home but only approx 20,000 in readily available cash. Which would be the better option; take a new mortgage on the property and use my cash as the down payment or to just take the entire amount out of my home. This would be my first investment property and of course am alittle nervous. Any suggestions or advise would be greatly appreciated.

Re: how to finance - Posted by SCook85

Posted by SCook85 on October 26, 2000 at 08:59:30:

I’m not going to advise you to use or not to use your personal residence. However I will point out that if you used the equity in your personal residence to obtain a line of credit and you use that line of credit the right way you could be well on your way in this game.

There have been many gurus throughout the years who have taught the method of using the equity in your own home to further your investment portfolio.

If you should chose to do this I would highly recommend having a detailed game plan as to how the money will be used, and how you intend to recoup the money to pay your line of credit back down.

I know of people who would never do this, and I know of people who have done it and are very successful with it. It’s a toss up.


Re: how to finance - Posted by JPiper

Posted by JPiper on October 26, 2000 at 24:36:40:

Always a good question Valerie. On the one hand, there are reasonable credit lines available using your personal residence as security. The problem is that it then risks your home.

My personal rule is that investments should stand on their own. I don’t involve my personal home. A rule that I used for years was that whatever cash I put into the transaction had to come back out of the transaction. In the earlier days this rule cost me some deals, but it kept me in the game. Nothing like having all your cash locked up and wondering how you will do the next deal. Then I went through a period where I left cash in deals, but I expected it back out inside let’s say a year from cash flow.

But I have not used my personal residence to further my investments. You’ll have to decide for yourself…it’s primarily a risk question. But these days with good credit you should be able to get 90% financing virtually anywhere as a non-owner occupant. On a $100K house this means that you have $10K in the deal. If you resell this as an example on a contract (if your state is one where this would make sense), this you may well be able to pull your $10K back out from the new buyer in a downpayment…thus leaving 0 invested and an ongoing cashflow and backend.

Hard to imagine why you need to involve your personal home.


Re: how to finance - Posted by dewCO

Posted by dewCO on October 25, 2000 at 23:39:34:

First choice would be to learn about creative financing here, so you don’t have to face the options you posed. That’s what this site is all about!!!

If you must go the traditional lender/purchase way, then it’s whatever lets you sleep best at night. If you take the money out of your house to start with, and the deal goes bad, then you’ve got your house on the line too. If you just use your cash, hopefully you could still take the money out of it AFTER you’ve spent (or god fobid, lost the money you pulled out of cash).