All Forum Posts by: Ray Loveless

If you are planning on moving to WA long term I would sell the town house and buy a owner occupied 4 plex or duplex in WA so you can put the minimum down and then move to a more comfortable town house or house of your choosing.   Either way I would wait to sell the Utah property until you get your feel for Washington and see if you want to stay there long term. When you move Washington I would rent for a while to get a feel for the area before I'd buy a multi family property. Id definitely move the equity you have into another large investment property.  Good luck. 

With rates so low and the economy coming out of lock down this seems like a no-brainer to me.

@Harmonie Borden, Thanks. You got me thinking a lot.  In the biggerpocket money podcast( eposode 14. the first 7 minutes) they mention that it's super difficult to choose a manager that out performs the stock market. I think I'm leaning toward a broad based low cost index fund.  Have a listen to that section. I'd be interested in your thoughts.

Thank you for all your feed back. Very helpful. I think the most important point with this is to not panic when stocks go down which they definitely will.  Buying high and selling low is never good and will happen for some individuals if and when things go south.  That being said if we're on the brink of another 2008 this strategy would be great.  In 2008 your stocks would crash(you don't panic and keep your money in place) and when 2012 comes around you're stocks have bounced back and you're in a perfect place to jump back into realestate when prices are at rock bottom.  Obviously the next crash won't mirror 2008 but it makes sense to me to pull some money out of realest while rates so low.  Getting a line of credit isn't as good as money in the bank... especially if real-estate prices drop and the bank cancels your line of credit.  

Regarding taxes, it's complicated,  My cpa got back with me and mentioned there are ways to write off the 20K in interest.

I'd like your thoughts on this as I'm thinking of doing something similar:

A friend of mine has a paid off 4 plex in Utah County and is thinking about doing a cash out refi into some some stocks(Something simple that tracks the s and p 500).  He can pull out around 500K.  He's not ready to buy another property but would like his money working a little harder for him during this time.  The bank will charge him 4% on the money he pulls out and he feels he can do better than 4% these funds.

I've run some rough numbers. The rent income should still cover his mortgage and repairs.  He'll be paying roughly 20K interest on his mortgage this per year. I'm not an accountant but I'm not sure he'll be able to write off this 20K in interest because he's pulling the money out and not re-investing it in the property.  That's one of the down sides but not possibly a deal breaker to me. 

What are your thoughts?  Haven't heard of many people following this strategy.  Is he crazy?  

(including @david k. loveless)

@Eric Moreno,

I own 2 fourplexes and a dupex in the area.  Here are a few options:

1, Your best return would be getting a nice house and using it as a vacation rental. I don't do this because I couldn't handle getting new renters every week. I have a friend that does very well at this in the area.

2, Upgrade to fourplexes. This would be the traditional more conservative route to go.

3, With that much equity and cash on hand you could to get a 1.5 - 2 million commercial multi-family property.  A good option would be to get a bridge loan on the property for 1 year to finance fixing the units up and raising rents. A property manager could handle the upgrades for you which I have found to be very nice.  After the 1 year period you could get traditional financing on the property and pull your down payment out to repeat the process.

I'm looking to do the 3rd option now on one of my properties.

-Ray

@Forrest Faulconer, Good idea, I'll call some bank and see what I can find. I'll post with what I find out.

So looks like I just got a property from a wholesaler in South Utah County, Utah (He's sending me the paper work to sign now). I'll be paying cash for the property with a line of credit I have on a investment property I own.  after closing I would like to free up this line of credit quickly so I can do another deal.   

   My Question:  Can my wife be the lender on this property so that I can do a rate and term refi with the bank right after closing?  Typical cashout refi's require a 6 month seasoning period according to my understanding but I don't want to wait that long. Thanks for any help. 

If this is possible should I have a wholesaler send the paperwork under my wife's name as the purchaser or does it have to be in the form of a note of some sort? ( I'm really not sure how to structure this transaction using a "note"). 

Thanks for any help.

Very interesting. Is there a place I can look in the county records to make sure that I am getting the primary resident discount,

You can also look on Utah counties website if you want the exact tax information for a specific property. They have a parcel map which shows all the properties and the tax information.