All Forum Posts by: Jason Pedersen

I'm over in California and in a similar situation to you. My wife and I purchased our home last year for $690k. After some upgrades and appreciation, it's probably $730k now. We are doing a refi now to save us ~$200/month in mortgage. I still need to do some more research on rents here (SFH in a suburb outside LA), but we are probably looking at a wash on cash flow. Doesn't sound great, but when I look at someone else paying over $850 of principal (and that's assuming we rent it out today), it starts to look pretty attractive! Then there is continued appreciation...

I guess the biggest question for you (and for my wife and I!), is what is the opportunity cost of keeping your equity in the condo? I know HELOC can help mitigate some of that, but not all of it and not without interest. Are you going to be moving somewhere in the same area, but paying more? Or maybe downsizing to something cheaper and you can get your cashflow there? Are you moving out of the area (or state?)?

In case you are curious, after we've lived in our current residence for two years (for tax reasons) my wife and I are considering downsizing to a cheaper place in the next town over (closer to where I work and a "nicer" area we just would like to live in more) and doing a live in flip. Hopefully that project will take two years and then we will have some options of two rentable properties or selling one (we will have $250-300k equity in the original place). 

We have two young children (3yo and 1yo), which makes everything just a touch more complicated (but fun!), but considering property values where we live and the minimal cash flow potentials, it currently feels like our best bet in terms of building wealth while still providing our family with the lifestyle we want for them.

Congratulations! It's very exciting, I am sure.

Hi @Eric Martinez! I'm in a similar position as you -- on my second home now after starting with a townhome that we made a good profit on after living there for 3 years. Trying to figure out how to invest locally. I'm out in Ventura County now (suburbs of LA -- pretty much exclusively SFH and condos) and have a family of 4, so house hacking is probably not realistic for us at this point. I've been looking into condos, since we have the capital for a down payment on a 2 bedroom in most areas, but it's difficult to getting the numbers make sense at current valuations. Appreciation is also not typically as great with condos (unless it's like beachfront property) and there is always the HOA wildcard.

One strategy I've thought of recently is downsizing to a "fix and flip" 3 bedroom/2 bath and renting out our current residence. It wouldn't cash flow very much, but having someone else build equity in a ~$700k home is attractive. Then after two years in the fix and flip, we'd have options of selling or renting and then potentially moving into our "forever" home as my young children get into elementary school (I don't like the idea of making them move around every couple years). All of this is pending my wife's approval, of course! :)

Anyway, just one strategy I'm considering. Keep us updated on what strategy you decide!

For an anecdotal reference, I just locked in a 3.125% yesterday for my personal residence refinance with no points, and closing costs around $3k. My loan is ~$500k, though.

Congrats on the BRR @Jake Silverman so far. Not sure you're going to be able to act fast enough though! I am going through refinancing our personal residence right now, and this fee is costing us a bit. We currently have 3.75% from our purchase almost exactly 12 months ago. I was hoping to get 3% while paying no points, but my loan officer told me I would have to be paying some points now because of this fee and that we wouldn't realistically be able to close before that deadline. I ended up with 3.125% with no points (just other "closing" costs).

On a 100k property, assuming you do 20% down, .5% of $80k is only $400. I know, money is money, but hopefully $400 isn't going to make or break the BRRRR!

Ha, very true! Compounding interest really isn't that complicated when compared to calculus, differential equations, etc.!

My wife is more artistic and into sales than I am, so hoping we will make a good REI team. Just have to drag her into it first...! :)

Mechanical Engineer in Ventura County (NW of Los Angeles). Looking to get a rental property. Currently own a primary residence that my wife and I are slowly rehabbing. As an engineer I may think "I can figure this out myself!" a little too often! It takes a bit more time and a lot more effort, but hopefully learning skills for future rental rehabs (and also figuring out which things are better off contracting out!).