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Any advice on next steps??

Any advice on next steps??

Hey Everyone!

Before I pose my questions, I’d like to give my current situation for context. I’m 24, make 85k a year and bought a home in Gilbert, AZ in July 2021 for 335k and currently have a principle balance of 314k. Given the current market here and how quickly values have appreciated, I was able to get a HELOC at 4.24% with a 50k draw(home appraised for 420k)to do a full home renovation. The renovation is on going and should be done next week. I’ll have spent 49k on the remodel (all HELOC). Im confident that the home will be worth 480-500k when the remodel is done. The rental income would be estimated at $2500-2700 a month. My goal is to buy a second home as a personal residence and rent this house out, eventually repeating this process until I build up a portfolio. I know this is a common strategy so I’m hoping some more experienced guys/girls can lend some advice on the following questions:

  1. How did you get your down payment for the second home? Normal saving? Cash out refi? I’m struggling because homes here are just skyrocketing in price and it’s hard as a single guy to save 25-35k while covering other expenses. I want to avoid selling this house like the plague…I think it’s my best vehicle to building up.

  2. Is it best to save money towards down payment, or pay off HELOC balance as quickly as possible and then use that available balance towards down payment?

  3. Does anyone have any experience with building a rental portfolio in a high COL area? The Phoenix area is becoming more and more expensive and “starter” homes that have solid rental capability are pushing 400-500k.

There’s plenty of other questions but I think those are the key ones to me currently. Any advice or experiences you guys could share would be greatly appreciated. Thanks in advance!

submitted by /u/clu9
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source https://www.reddit.com/r/RealEstate/comments/tpf2uy/any_advice_on_next_steps/
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