So I recently bought a mix use property with family. I took the mortgage they are on the deed. Reason why they are not on the mortgage is because they their credit is not as high as mine. The commercial space is not operating currently but will need roughly 15-20k in repairs to get it operating.
I was thinking about a Heloc to get the repairs done to get it rented to help with the mortgage. Just looking on opinions on whether that is the smart move. I will most likely be the only individual on the Heloc as my credit is the only one that could possibly qualify. What are the pros and cons to this and what would you do in this scenario as the commercial space could generate roughly half of the mortgage?
Owner occupied. Owned for roughly 8 months.
Is HELOC the best option?
byu/Positive-Midnight470 inRealEstate
Posted by Positive-Midnight470
4 Comments
***”Reason why they are not on the mortgage is because they all have terrible credit.”***
***”What are the pros and cons to this “***
There are no pro’s. This won’t end well.
You won’t be able to do a HELOC on a mixed use property – only a 1-4 family. Additionally, did you make a substantial down payment that would give you equity in the property to borrow against? Since it’s less than a year often lenders will still only lend against the purchase price u til the property has seasoned. Given that you are making property improvements on a space for rent a term product for a commercial property is probably your best bet so you can amortize those expenses.
The smart move is to not put anyone on the deed who is not also on the mortgage.
How much did you put down? Unless you started with a bigger down payment there won’t be much if any equity to borrow against
To borrow $20k you have other options with lower fees overall like personal loans, “consumer credit” like a home depot/lowes loan. It sounds like the rental income would more than pay for this. Potentially a credit card balance transfer or promo zero interest. Try lightstream, sofi.
Also you can rent out a commercial space where the tenant handles renovations