The most common type of real estate investing is purchasing a rental property and becoming a landlord. The biggest advantage to this strategy is that rental properties can provide passive income while appreciating in value. Many of the costs associated with a rental property are tax deductible. This includes the scenario where you borrow 100% of the funds.

As purchase prices continue to slide, people are looking to take advantage of lower price points. However, the obvious catch when buying a new in a down market, is having to sell your home in a down market. Our clients are now exploring purchasing a new primary residence while keeping their existing property as a rental.

One of the most popular ways to obtain the down payment, or the entirety of funds for said new property is to leverage the equity in your personal residence or another property you own. You simply need to contact your current lender or a new one and apply for a Home Equity Line of Credit (HELOC) or new mortgage portion. Once this simple process is completed, you can now use these funds to buy a new primary residence.

Here is the process for obtaining financing. This would apply for any type of residential financing.

Contact lender
Provide all pertinent documentation to the file (income verification, property info, etc.)
File is built and sent to credit
Once a conditional approval is in place, an appraisal may be needed on the subject property. This is done to confirm the value and available equity
Once the final approval is in place you will need to go to your lawyer/Notary to finalize the deal