All Forum Posts by: Dan Torluemke

@Dan Torluemke

I am with @Bill S. on this one unless you are serious about looking into other markets. 

All the markets across the front range are hot or heating up right now so your options if you want to stay away from the hot markets are either places like Pueblo which is about a 2 hour drive, or out of state. 

What good is that cash going to do if you end up sitting on it? Makes more sense to me to continue to cashflow and have a tenant pay down the mortgage. I also think that the Clayton neighborhood has a good chance to continue appreciating. It is close to downtown and has convenient access to I-70 as well as City Park, City Park Golf Course, and Park Hill Golf Course. Get rid of some of the riff-raff, put in a couple of decent looking shops and restaurants and suddenly you have a great neighborhood.

It is probably going to be better to sell and look for a property that is better suited for a rental.  It might take a while of looking to find something, but you should be able to get an investment with nearly 100K at some point.

If you own both properties, you will be at 75% leverage in a hot market.  While that is great if appreciation continues, it can be very bad if things go the other way.

How does you monthly surplus look with the mortgage payment on the new house?

Depending on your plan on acquiring new properties one big determining factor would be your DTI. With the new home at 425k it will definitely make an impact on your ratio compared to your current payment. Are you positive you can keep the current property while still qualifying for the new one?

Lots of people would pull even more than the 55k for the HELOC and utilize that extra to get the other rental properties. If you get a 90% LTV HELOC before you move then you would have 120K to play with. Take off 55K for your down payment and there is still 65K to use if needed. The number I was told on a HELOC was to not go above 75% usage. So on 120K don't use more than 90K. That still gives you 45K to play around with and find a property or 2.

Dan,

I also own a property in Clayton & asked a similar (but different) question less than 2 weeks ago.  @Bill S. and @Walker Hinshaw were very insightful.  Walker lives in your neighborhood.  For your reference, here is the thread.  I hope that is helpful.

http://www.biggerpockets.com/forums/311/topics/190265-denver-what-would-you-do

@Dan Torluemke  - won't say keep or sell - I love rental property, a few items stick out on this one that would concern me.

What is the new payment with Heloc for down payment? Interest only? any plan to reduce that debt?

In Clayton - have to assume a pretty old house? Usually not best for rental property - maintenance.

Seems like the cash is better used as a down payment and ability to do a couple more deals. The market in Denver is nuts - but I would rather own property here than in other markets - especially with your limited experience - there is never a bad market to buy rental property up or down, as long as you have a long term objective.

Best of luck!