This is my first post, I have been on BP for the last year or so, and while reading my daily digest today I thought - I could actually also ask for advice from BPers on what would be the best strategy in my current situation. Here is some background information: I purchased my first property in 2010, a three-level townhouse in Sterling VA (Northern Virginia, so pretty hot real estate market), close to a community college, plus there are quite a few government contractors and IT companies in the area. Since it was in the middle of recession (end of 2009 - beginning of 2010) I got the property very cheap, for 125k. Since then I refinanced the property (last year) and dropped my interest rate to 4.5 and got rid of PMI, so my mortgage is about $800 per month. It is a two-bedroom TH with basement, 1.5 bath and I live in master bedroom while renting out the other bedroom and basement. The rent is $1050 per month, two long term tenants so I think I will increase it more with turnover as I have not increased rent at all for the 7 years I had it. The townhouse two units down from mine sold a month ago for $250k although it had extra two bathroom installed (2 bed 3 bath, one bath in basement). So I could potentially do the same thing, install additional bathrooms. Then last year I also purchased a single family home in Maryland suburbs of DC, which was an REO and I got it through Hubzu auction. House sat empty for a couple years, so it required a lot of work - I racked up $25k in credit card debt to pay for repairs, major part of which I did myself. House was rented for half of the last year and has been rented out (by room) since it became habitable, I also live there part time and it is cash-flowing $600 per month. The house is 3 level but the basement is not finished, it has a walk-out, electricity and AC, plumbing rough-in for full bathroom - in fact it used to be a fully finished basement but everything was told bare due to water damage a few years back. I bought the house for $233k, and the comparable home down the street from mine was recently sold for $360k, so I assume my property has already appreciated as it was the worst house on the block, dragging everyone else's values down. I have a tenant who would like to move into the basement once it is finished and rent it for $1000 per month, bringing the cash flow to $1600 per month on top of $1650 that is the mortgage amount. My goal is to become location independent in near future (2-3 years), so that my husband and I can live overseas cheaply with rent money from investment properties. I can see that we need to get that basement finished as soon as possible, but I would not want to tap into credit cards anymore, I paid off high interest portion of the credit card balance incurred from repairs and the deferred interest is going to end soon which was about half of the total balance of 25k, so this summer it will start accruing interest and I would want to pay it off soon. What would be your advice on sourcing money towards finishing up the basement? Tap into equity of VA house? Tap into equity (if any) of MD house? Use credit cards again? Just focus on paying off original debt, then start the renovations, I am estimating about 1 year from now? Ideally I would want to stay away from any additional encumbrances tied up in the property in addition to mortgages. Any advice is greatly appreciated. Also part of our plan is purchasing 3rd property in this timeframe (2-3 years) through my husband's VA eligibility, so we would want to take that into account when making our plans. Thank you very much for your advice, and look forward to hearing your advice.
