I am 52 years old and recently purchased my first 3 family rental in CT. Had a great interest rate of 3.375% with a 25% down from 401K proceeds (as a loan) All closing costs were payed with money from my savings. I am currently paying the 401K money back thru payroll deduction over 5 years from a very stable regular job. The property had 3 tenants which I still have. Did not have to do anything to property. In 6 months I have spent around 1K on a water heater and small miscellanies items. All three rents are in average of $1125 so I think I've done well with the numbers considering the mortgage is around $1500. Due to the incredible low rates I am now contemplating the idea of taking what my bank calls a "Fast Track Equity Loan" which is only offered to high credit customers like myself (800). That being said, it is an Equity loan which has no closing costs, just a $350 non refundable fee. There are two options: An 8 Year at 2.85% or 12 Year at 3.15%. My primary home is valued at around 265K and I'm only looking to cash out 50K in Equity to help fund the down payment of a second 3 family rental property. I'm considering the 12 year loan which would be one additional year to what I currently owe on my home. The new payment would jump up around $400 but something tells me it may be worth it as long as I can find another 3 family similar to my first rental. Any thought as to if this is a good idea or am I way too early in this game (6 months) to start thinking of a second property? Also, would it be better just to keep making the money and pay off the 401K loan faster even though I'm really paying that back with my regular 9 to 5. The cash flow on both rental properties would most likely help me pay off my primary in 10 years. I don't really plan on having more than two properties as I just want to have extra income come retirement. Any advice would be helpful. Go for it or wait till I get my feet wet for a longer period of time before I start thinking of acquiring the second rental property?
