Hello,
I purchased a property in Virginia beach for $439,000 in March of 2015 and today it's worth $525,000 (same home builder, floor plan, built down the street sold for this amount). Actually, for a variety of factors mine might be worth more, but I'll keep it simple. The mortgage left o the property is $333,000 +/- @ 4% (30 year fixed, pay off date 2038/roughly 20 years). The property is currently a summer/winter rental that is fully booked.
I'd like to purchase another investment property in the area, but have my concerns.
The new property is from the same builder, same neighborhood, but is larger (2,021 sq ft vs 1700 sq ft) + 2 extra parking spots and a great backyard. All of these are pretty rare for the area.
The property is listed at $535,000, the builder said he would put 15k towards closing. This basically leaves me with the down payment. I don't intend to live in the property so my lender is offering 10% down as a 2nd property as my parents will occupy it / I will visit and stay as well.
This means I have to put roughly $55,000 down on the property and expect mortgage including insurance/taxes to be around $3200 a month. This is a lot for the area as I think I could likely only rent it as a winter rental for $2,500 - $2,700 a month. If it was a summer rental, I could likely break even on the mortgage for the year.
The more concerning part to me is the down payment. I have 10k in savings, 30k in my emergency fund. No other debt and another 340k in investments (401k, vanguard, stocks, HSA etc.). I don't want to use my emergency savings and I don't want to pull it out of my investments so I was considering using a home equity loan. I've never done this before so I wanted to know if someone could share with me the details, risk, value etc.
Thanks!