All Forum Posts by: John Lindley

Thank you @Dan Schwartz for your reply, I shared your post with my wife as I think this is a very sensible approach.  We still have a lot of work to do but your reply makes a lot of sense.

@Erik Estrada I'm hesitant to do a complete refinance on our existing house at the moment.  We have a ridiculously low interest rate on our current mortgage and when I do some quick math on a complete refinance pulling money out, the cash flow looks to disappear.  If that becomes our only option, then renting out this home is probably not the right choice.

@Dave Skow We are still debating a HELOC versus a home equity loan. We have received some contacts for some lenders and accountants to talk to, that is going to be our next step to see if this is possible. We are still leaning towards the HELOC due to the flexibility, but rates are a concern. No matter what, that estimated monthly payment will have to go against any cash flow.

We also are going to have to look into how to be landlord as well, if we move ahead with this.

 I'm just starting to learn about this, so not sure I'm educated enough to make a solid determination on this, but if I could get it for what is currently left on my mortgage, I imagine I would.

The house is in a nice neighborhood and 2 blocks from an elementary school with a good rating.  There are a number of rentals in my area and they tend to fill quickly and stay filled for a long time, usually with kids.  We are friends with the owner of the property next to us (she moved to another state years ago and rents out her house) and we've talked to her a number of times about her experiences.  Our house has been well maintained and not a lot of work needed to move in renters.  It seems like it is a reasonable possibility to turn it into a rental, just need to make sure everything pencils.  And buy the other house, of course, need to figure out the best financing for that.

 I'm afraid you lost me a little.  Our house has definitely gone up in value since we purchased it.  You are the first person I've encountered to say turning the existing house into a rental is going to have a crazy tax hit.  Can you send me some information on this?

Unless I'm misunderstanding you.

 At the moment, we are not talking about becoming full time real estate investors.  Our initial goal is to provide a small source of secondary income with a long term goal of having additional income in retirement.  Could this turn into something more if it works?  Maybe, but that's not the intention.

Your point on a HELOC is a good one and after Nick's comment, a home equity loan might be a better option. We have definitely discussed just selling our current house and upgrading to a bigger one, but it seems like a mistake not to run the numbers and see if this potentially works.

Looking into this some. Being very conservative on what we can potentially rent our existing house for and applying the 50% rule, the cash flow would be about $250 a month. Really a range of prices for a similar houses and options on utilities being included. As we've lived in the house for a while, will need to really sit down and detail costs and put together a sheet. Initially it looks plausible.

Though that's before any refinancing options, which will definitely change the math.

Thank you both for the information, I will definitely run the numbers and make sure it makes sense.  We felt it did but best to run the numbers.

And no, I did not know you can't use rent from our "departing residence" with an FHA loan, that may change things. This is exactly why I asked, appreciated!

Hello,

My wife and I are looking to get a bigger house and we want to keep the house we are currently in and rent it out.  I've been reading the guides and forum, and talking to some people in the community.  I'm hoping to get some feedback on our financing and loan plans.  If I've missed something in one of the guides or forums, feel free to send me a link.

Home prices in our area have started to come down and we are targeting to try and purchase at the end of this year. Our current home has a LTV of 50% or better. We were thinking to apply for a HELOC now, this way we have this in place when we buy the new home so we can do any necessary repairs on this house and any unknown repairs on the new house. We thought this gave us more flexibility than the Home Equity Loan as we don't know how much to pull out.

We are thinking to purchase the second house with an FHA loan. We can find enough capital to pay for this without using the HELOC.

Are there any concerns or watch outs with this strategy? Could I have problems trying to get the FHA loan so quickly after getting a HELOC? Is there any challenges with getting a FHA loan if I already have another home? As the current home isn't a rental property yet, will that cause problems during the FHA application? Anything else I haven't thought of?

Thank you for your time and advice!

Hello,

1. 🌎 I live in West Sacramento, CA and looking to stay in the Sacramento area.

2. 💫 We want to purchase a larger home and rent out the house we are currently living in.

3. 🤪 I have never been to Disney Land.