All Forum Posts by: Mary Gold

@Corby Goade Ah... That sounds smart. I called BOFA and they don't do HELOCs on investment properties apparently?! I guess I could find another lender. I don't know if I have the gumption to do the BRRRR. But that sounds like what I should be doing.

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Hi all, 

Instead of all this $ maneuvering, I'm now facing another decision: 

A buyer who tried to buy my neighbor's condo and got outbid with a cash offer is interesting in buying mine. My unit just appraised for 640 but he's saying (so far) he will want to pay below 630, since that was the end price on the unit he was initially interested in, and that one was "nicer" (staged vs mine with 3 dude renters). 

So--- if I do sell, I can potentially put down payments on 2 investment properties! 1-in an area I would want to live in 2 years and 2) in an "up and coming area" where I could live in 10-15 years. This way I will have 2 investment properties, and in areas I would rather live in eventually. 

Am I just caught up in a selling frenzy and seeing dollar signs when I should really be hanging on to my awesome investment with a low interest rate?  Should I just go for a home equity loan and buy a 2nd personal property and call it a day? 

Scenario 1- I don't sell. I keep my low interest rate. I take out a 2nd mortgage (home equity) and buy a personal property at a normal interest rate.

Scenario 2-I do sell. I take the $ and buy TWO investment properties that will require 2 investment loan interest rates (5+%) but I will have properties in more personally-pleasing areas. (I have a feeling you all will say it doesn't matter how much I like the area... it depends if it's making $ as an investment to consider this a true investment)

Any thoughts are welcome. I know I've already presented a ton of scenarios and may be overstepping the question quota on this thread!

Thanks.

Hi @Corby Goade I'm afraid of the volatile interest rates I would face with a HELOC. That uncertainty makes the situation unattractive for me. Pls tell me if I'm missing something here. Thank you!

Thanks @Dave Foster. Makes sense. That's what the mortgage lender told me. He said to ignore the %s, bc in real estate, I should be focusing on the value.

To answer your questions: 

• If I refi-cash out to buy another property, my cash flow would go from a very nice positive to a slight negative. But it would likely even out very soon. The neighborhood is hot and I could afford the extra couple of hundred bucks to keep the place. 
• Yes, I don't want to sell without a 1031 due to all the taxes. So I'm actually contemplating a multi-unit as another option still! Just don't know how much downpayment I would need (20%? 30%? more?) for that and whether I can live in one of the units, even though it's a 1031. (I posted a fresh new question in the 1031 category just now.) If you have input on that, please let me know. 
• My current cost of living is not strenuous. I have enough to live comfortably enough now. If I refi-cashout and buy another place, I will not have as much disposable income but I'm okay to live with that. The cash situation wouldn't feel like a huge impact bc my current rent is not exactly cheap.

Thanks for your help.

I own a rental condo with over 50% equity right now. 

If I sell it and do a 1031: 

1-Would I be able to get a multi-unit (4 units) if I can get about 30% downpayment? 

2-Would I still be able to occupy one of the units, even though it's a 1031? 

3-What if I don't occupy a unit?

Thanks.

@Nabil Suleiman thanks for the questions.  Here are some answers/comments:

• How much cash flow do your stocks bring you?  Um... It's volatile. I am up, but I never take the $ out. I just let it sit. So really, I don't know. 
• Yes, me too. I'm leaning towards keeping the condo as-is. I can't get a 3.6% interest rate again! And $1K is good cash flow. :)
• Oh thanks for clarifying that the $750 is the size of the mortgage that could be tax deductible with the new tax codes. I'd probably wanna stay under the jumbo loan limit anyway though, so I'd likely have to take a loan less than 680 (or whatever the limit is these days in Cali). I'm not sure which would apply to me: "limit is $453,100 nationwide, with extended limits of up to $679,650."
• My investment property is declared on taxes as an investment already so I doubt it's considered a personal residence anywhere. So I'm already paying whatever taxes on the income and factoring in depreciation.

Thanks again. Seems I may sit tight. I just have this urge to "nest" and buy a place so it's mine and I feel like I'm setting roots again. But hey... renting is pretty head-ache free, other than the annual rent hike-ups. 

@Dave Foster @Nabil Suleiman @Alexander Zurn I got some numbers crunched (by a mortgage professional, so his best interest is in me getting TWO loans from him of course).

The scenario is now:

-Refi cashout at a new interest rate of up to 5.6% (vs my current 3.6%). YIKES!!! Take $130K out. This would make my all-in expenses on the rental about $150 more than what it's currently renting for. 

-I would take the $130K and buy a personal residence, up to $750K (maybe for the tax shelter situation), but ideally, I guess I would have a $650K limit given I would want to put 20% down. 

-My current rent is $2600 for my personal residence, and will definitely rise, come April.

I guess my real question is:

1-Should I keep this investment property? 

Pros: 

• Good interest rate
• high-demand area
• already at $1000 cash flow. 

Cons: 

• There are some builder flaws. But I hear those happen anywhere. 
• I pay a manager to collect the rent. He's a shmuck but I could just terminate him. 
• The annual income from this property is only about 7.7% (compared to purchase price) now. And it will be a negative if I refi with a higher interest rate and a bigger loan. 

2-Should I just sell the investment and take the capital gains hit and buy me something at a lower interest rate? (I can always buy a rental unit somewhere, with the full intention of making it a rental from the start vs the one I currently have  as a rental, which started as a personal residence)

3-Should I leave the investment condo, and just sell my stocks for a down payment on a new home for me, (and make sure I don't exceed the $750K limit for the tax deductibility)? 

What would you experts do??? I hope it doesn't sound like I'm at square one because now I have some #s. 

Thanks to you all! Great points by each of you. Great point about the 750K limit and the new tax code, Nabil. And Alexander, definitely worth looking at real numbers. You're right. 

I think @Dave Foster understood my conundrum most closely and gave me the most relatable response. I'll be talking to a professional financial advisor as I think I would like to explore selling and getting a multi-unit if possible. So a combo owner/investment possibility. 

Hi bought a personal residence condo in 2009 for 480K in Southern California. The area has improved. It's been rented out the past 7 years, minus a 9 month personal-residence stint where I refi'd to a great rate (3.62%).  I only owe 270K now. The condo should be worth about 620K now and I would like to buy a place to live in (immediately or eventually). So I am wondering: 1-should I cash out refi and take a higher interest rate to have cash in hand for another down payment? OR 2-Should I sell the property, take the $ and buy another place as a 1031 exchange and then move into it in a few years? 

I'm not in a rush to buy but do want to maximize the equity and get something nice I would want to live in myself eventually. I don't want to go back to that condo because the neighborhood is nice but not close to my industry.

What is the best move, long-term?