All Forum Posts by: Derek Back

Hi, anyone have a recommended CPA and or a tax strategist south of Boston, MA.  Someone who is experienced and real-estate focused.  Thank's

@Nathan Gesner I appreciate you taking the time to let me in on those scenerios. I was not very clear about this situation. I am definitely not cash flowing $650. I meant I have been putting the $650 cash back into my HELOC. This is with interest, condo fees, Taxes, and insurance being paid. I originally analyzed the property with vacancy rate of 5% and maintenance. Now hear me out on this part. I hope its not insane.

I have a equity line of $81k from my primary residence and I used $75K to make the purchase. Im sure you know how it works but now every month I am charged interest on the amount I have borrowed ($75K) so, instead of putting the vacancy rate and maintenance aside I just put it into the equity line. I figured the money would only cost me interest if it was set aside and put into a separate account. If I needed it I would take from the equity line since I had already accounted for these contingencies. Long story short I am not cash flowing $650 that was my mistake. Just that after the actual expenses are covered the rest goes back into the equity line. I planned on doing this until the HELOC was paid for or I refinanced into a mortgage. Then I would plan to put vacancy and maintenance aside into an actual account.

I hope that helps make it seem like I have at least thought it out. But I am open for suggestions and appreciate your help.

I have never heard of that. I really appreciate the help. I’ll contact my broker and get some info. That’s exactly the info I was looking for. Thank you for taking the time to fill me in. 

I am new to the investment property game and just purchased a condo using a home equity loan (HELOC) off my personal house. The HELOC is for $80k and I purchased the condo for $75. The loan is interest only payback at 4.99% for 10 years. After all expenses are paid I have been putting all the cash flow which is about $650 a month back into the loan. I have had the rental for 6 months now charging $1400 a month. Doing this the loan will be paid off in about 8 years. I want to buy another property but have most of my money tied up in the condo. In order to get the cash back I would need to refinance into a mortgage to pay my HELOC. But a 15 year mortgage would be at 5.5% with a payment of $1150 a month (including taxes, condo fees) only leaving about $100-150 cash flow after I account for vacancy, insurance, and repairs. I could also opt for a 30 year mortgage at 5.75% which would be a $950 payment allowing for about $350 cash flow a month after adjustments. I would just be paying a ton in interest over that amount of time so it doesn't seem worth it. I'm just looking for some advice whether I should just keep it in the low interest HELOC and spend another year or more saving money for a down payment on an additional property (my plan was to purchase 2 in 2019). If I bite the bullet and get a mortgage I feel like I will be turning a very good rental into a mediocer one at best. Any thoughts? I know it's complicated hope it's something someone has experience with.