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How can I use one rental property to purchase another?
...asked on August 7th, 2013 @ 2:40 pm in Refinancing
You have a couple of different options depending on your equity and current situation with your rental property.
You can do a cash out refinance on your investment property, lenders are tough on these loans and the rates are higher than primary residences. (Investment properties have high default ratios). Or you can simply take out an equity line and borrow the cash against your rental property to make the down payment on your next purchase. Again, the rates on this will be higher than a primary residence equity line.
You’ll need to decide what is a better way for you both by payment and interest rates.
Andrea -The Mortgage Specialist
...answered by Andrea – Mortgage Specialist on August 7, 2013 @ 3:30 pm
YOu can if you have sufficient equity in the first property to do a cash out refinance to fund the purchase of the second home.
...answered by mazziatplay on August 7, 2013 @ 3:49 pm
The only way is if there is equity in the rental property. You can refinance the rental and remove the available equity to use for the purchase. If there is no equity, then you can’t use it. Income on the property can’t do anything other for you than showing hopefully a positive cash flow so that you have no liability on the property itself, and it pays for itself, and keep in mind that most lenders do not let you use all of the rental income. They use participation percentages, anywhere from 75% of the rent to 90%.
...answered by novastarbanker on August 7, 2013 @ 4:46 pm