Case Study - All in or not?

[Christopher Lane]

Hey team, I'm going to present a case, my own personal case.  I hope to learn what you would do in my situation.

Goals: purchase property to hold and gain passive income, possibly renovate and refinance for more purchases.

Situation: I currently own a 3 bed 2 bath condo in Oceanside California. I purchased in 2017 with a VA loan. Purchase price was $365k with closing costs of $7k rolled in. Total mortgage amount = $372k.

Appreciation: Appreciation has been good and the house is valued around $403k - $410k. 

Current loan: I have $352400-ish remaining. at 3.375% interest. plus monthly HOA of $357.

Misc Financials: I have about $11k between a Roth and traditional TSP (thrift savings plan for the military types - IRA/401k type product) willing to withdraw from. Currently in the Reserves but on deployment making about 12k/month tax-free, but only from August 2018 to April 2019. Wife is trauma Nurse in San Diego and taxable income was $92k this year. Current credit score for me is around 680 - wife is around 740 (I had to max out 2 credit cards for a surgery :( for my poor dog) I expect to pay them off within the next two months. Then I will be debt free minus $7k left on a loan for the wifes' engagement ring.

So, Friends, what would you do?

[Tim G.]

How much in savings do you have? What are your plans for work when you return in April? Do you have leads out for consistent steady employment and if so at what salary amount? How much is on these two maxed out credit cards? How long will it take you to pay down all of the CC debt and the loan for the ring? Are there any other debts such as student loans or car notes? 

It sounds like you've got some debt to pay down and aren't very liquid currently. The market has softened here in San Diego, especially Oceanside (I live here too). I wouldn't consider the equity you have in your town home as something that is a for sure or as something that could be relied on as a source of capital. To go all in, you really need something to go all in with.