Buy a home, build your wealth
How To Grow Your Real Estate Portfolio
So you’ve had a taste of homeownership & now you’re hooked! Investing in real estate can be very exciting and there are many ways to build your portfolio. Before you buy your next property, let’s go over a few things, such as how to purchase a second property by using your existing home equity, the differences between purchasing a rental property, second home and / or vacation home.
Tips & Tricks
Purchasing A Second Property
When purchasing a second property, most lenders will allow you to borrow money against your current home equity and use it towards a down payment for a second home. There's a couple of different ways to do this, so let's get to it.
- Rental Property
- Buying A New Primary Residence
- Vacation Home
- Second Home
- Home For A Family Member
- Investment Property
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Can I buy a new home & turn my current one into a rental?
YES! This is the best way to build your real estate portfolio. When purchasing a primary residence, you can put as little as 5% down again. We can use a hypothetical rental income for you current home (that's turning into a rental property) to help offset it's cost, such as mortgage payment, taxes, heat. Sometimes there is a surplus of income or a slight shortfall in expenses. This kind of washes the property from the calculation and help you maximize your next purchase price.
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How much do I need for a down payment on a rental?
If you're purchasing a rental property or an investment property, the minimum down payment is 20%. We can then use the rental income from this property to help qualify you for the new mortgage. Reminder: you might be able to use equity from an existing property to make this happen!
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Refinance to access equity
This is when your home gets re-evaluated to determine it's new value & the equity you've built over the last few years. You can access up to 80% of this new value in the form of a new mortgage. This is the most common way to borrow equity to purchase your next property. There may be cost associated with this option, such as an appraisal, legal fees & a penalty for breaking your existing mortgage (if applicable).
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Home Equity Line Of Credit (HELOC)
A HELOC is similar to a regular line of credit, but it's secured against your home - so the interest rate tends to be a lot better than your standard line of credit from the bank. if you don't have a mortgage on this property already, you can access up to 65% of the value of your home. If you have a mortgage (worth at least 15% of the value of your home), you may be able to access as much as 80%! We have access to fancy mortgage products that allow you to have both, a mortgage & a line of credit combined.
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Second Homes & Vacation Properties
Did you know you can put as little as 5% down when purchasing a second home? Vacation homes, depending on their accessibility may be eligible for as little as 10%. But if you're wanting to skip out on default insurance premiums, it's recommend to put 20% down or more.
