All Forum Posts by: Evan Cochran

Hi Joshua, thanks I'm thinking the same thing.  It seems like prices have been going up steadily/insanely for a long time in Somerville and they don't seem to be slowing down.  I looked at prices from 2006-2008 the other day out of curiosity, and it looked pretty easy to find multi fams within a half mile of Davis/Porter for under $500K.  I wonder if people will say the same thing about multi fams selling in Winter Hill/Medford/East Somerville for $700K with similar regret 10 years from now.  I will say that some of the prices seem to be more of function of converting multis into condos rather than cashflowing rentals--- which does seem a bit speculative to me.   Smaller 2-3 family developers are definitely killing it right now, however.  

Ben, I looked into PenFed and they actually seem great! The offered a 4.75% HELOC with an 80% LTV on my investment property. Way better terms than Brookline Bank offered, and it seems pretty easy to join the credit union as well. The person I spoke with on the phone was very competent and I felt like it would've been an efficient process. I will definitely keep them in mind in the future, thanks for the idea.

Ultimately I pulled the trigger on a cash-out refinance at 4.25% with a 75% LTV. I'm a sucker for a fixed rate I suppose. I hate to lose my owner-occupant rate, but I think it will be worth more in the long run to have additional capital to invest elsewhere. Just did the appraisal today so the timeline to buy something new will probably be late summer.

Part of me thinks it may be best to wait until the Presidential Election ends in order to see how the economy reacts one way or the other.  It does seem like a good time to have cash on hand...these are interesting times.   I know it's foolish to try to time the market and there's always going to be some excuse not to take a risk, but there must be some sort of correction on the horizon sooner than later. I guess it's a gut feeling and probably incorrect, but the Somerville/Cambridge/Medford market must be somewhat cyclical, right? 

Hi Dan, Brookline Bank (www.brooklinebank.com) said they'd do the 5.5% HELOC. I think Century Bank would also do one with 75% LTV and a lower interest rate, but they go off assessed value instead of an appraised value. In my case, the city's assessed value is about $300k less than what the appraised value would be.

Patrick, I think that's probably what I'll end up doing.  Thanks for confirming I'm not being too crazy haha

Hi Patrick, thank you for your response.  

It would basically take me from a $14,000 cash flow to about a $2,000-$3,000 cash flow depending on which option I went with.  Not great!  

I'm only interested in doing that in order to buy a different property I found that would cash flow about $15,000 with good upside.  I figured it would make sense to sacrifice some cash flow in one property to make more total by buying another one.   I considered selling the first property, but would like to hold onto it as the area seems to be appreciating at an insane rate.  

Part of me just says leave the $14,000 cash-flowing property with the 3.35% mortgage alone and try to raise capital another way.  Is that too conservative?  I still feel like refinancing into a 30 year fixed @ 4.25% is pretty safe.  In that scenario, I would still get to hang onto a house I believe will continue to appreciate and free up more money to leverage elsewhere.  

Really kicking myself for not doing this when I still lived in the property.  Lesson learned I guess.  

Hello!  

I bought a two-family house in Somerville, MA a couple years ago that has appreciated a good amount.  I currently owe $285,000 on the mortgage at a 3.35% interest rate for another 25 years, and believe it will appraise around $650,000.

I would like to buy another rental property sometime in the near future, and was hoping to pull some equity out of this house.  Unfortunately I moved out of the house last year and no longer would qualify as an owner-occupant.  I called around a couple banks to ask about options for pulling money out of an investment property, and the it seems like the best options are:

HELOC taking out $170,000 @ 5.5% interest. Would be able to keep my existing mortgage but think my monthly HELOC payment would be around $1,043/mo. My existing mortgage principal and interest payment on that property would be $1,359/mo bringing my total PI expenditure to $2,402/mo.

Cash-Out Refi taking out $170,000 @ 4.25% interest.  Would now be paying $2,238/mo plus closing costs on $455,000 of debt.  

The house currently rents for $3,400/mo.  

Does anyone have any insights into which option would be better? I liked the idea of having a fixed rate, and am afraid of having a HELOC that the bank could call back at anytime. But I also would love to keep my existing mortgage and am loathe to refinance out of such a great rate (3.354%).

Any help would be hugely appreciated.  Thanks!