Posted by del1bach on July 31, 2003 at 16:10:12:
Couple possibilities.
You can ask the bank to put a second mortgase for the downpayment against the rental
If they dont want to do that (look for another bank or) take out a home equity loan for the down payment.
refinance the current house and pull some of the equity out in cash.
dell-ohio
using current equity to become a landlord - Posted by TomW
Posted by TomW on July 31, 2003 at 14:44:54:
I currently live in an urban neighborhood that is appreciating between 12% and 15% a year. I have been in the house for just over two years, but my family has outgrown it. I would like to purchase a new house to live in and keep my old house as a rental for at least a few years to take long term advantage of the great neighborhood appreciation. I would not have money for a down payment, but I do have a significant amount of equity in my current home. How do I use that equity as security against a new mortgage?
Tax considerations - Posted by randyOH
Posted by randyOH on July 31, 2003 at 16:52:55:
Tom,
It might make a lot of sense to just sell the house. Your gain would not be taxable. Then you could use your cash to buy a new residence and a rental property. You would then have a stepped-up basis in the rental, which would give you more depreciation and a smaller gain when you sell it.
And I suspect you could find a better rental property than your present residence. For example, you might want to look at duplexes. Or maybe a single family fixer or foreclosure that you could buy below market.
I can’t believe the appreciation you speak of is limited to the neighborhood you are now living in. You might also want to consider that 12% to 15% appreciation is not normal and will not continue indefinitely.
Good luck,
Randy