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when did i say i didn't have a mortgage on the new property????????????? that was the problem i had to put down 30% and than the property needed an add 100k in work..................my mortgage states that i can not refi without 5% penalty..........which makes no sense................................so i need to refi i quess my house before my heloc goes through the roof................
What you saying makes sense. I don't doubt the property is a good situation for you currently, and I completely understand your desire to NOT have to pay the penalty for refi, but that is one of the ways that the lenders are putting the "bad mortgage nightmare" behind them. You have to remember that the folks you 'borrowed' from generally have to have something to help them estimate how long a loan will be productive for them, and the penalty fits into their models...
I really meant it when I said your only way out may be to sell. Of course that may not make sense, and it may be that if you have additional apartments adjacent there may be a way to look at everything as one big package. The situation you are in is NOT uncommon and I have personally run into it. If you can afford to carry everything then you have to do some 'spreadsheet analysis' for the longer term and build in some 'what ifs' as far as the longer term rate increases go. If you cannot retire the HELOC debt on the strength of rents then you need to think of other ways to go -- I don't think ANYONE is expecting rates to fall, though the specific increase caps should be spelled out in your loan agreement.
As some one else said, it is generally wiser to try and use cash from one income property to buy another debt free. You can create a much more resilient "chain of collateral" doing that and insulate your personal home from changes in the economic landscape.
Take a look at what sort of return of capital you are providing overall, with ALL the inflows and expenditures. If this number has been positive you ought not to worry too much. If the positives come too much from market driven appreciation you need to factor how much of that is likely to continue vs be lost. If you are really serious about comparing your abilities to not just "fix up" place but run it long term it probably makes sense to "benchmark" yourself against some the REITs that focus on running apartments, like Aimco, and/or some REITs that focus on "repositioning" (fancy real estate firm for "fixing up and reselling") properties. You probably are more like one than the other and it is good to specialize...
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