All Forum Posts by: Rich Pritzker

I'm not invested in fundrise. But have invested in REITs. My REIT investment are in deep red and I'm hoping they survive.

Regd fundrise - are they regulated? A few months ago I looked up a few properties at fundrise being advertised at ~70+% higher list price than Zillow value. If investors bite, sure - they deserve the high yield as promised.

I hate to bring this up when OP’s in this unfortunate situation: Fundrise does strike me somewhat as a MLM scheme. If it’s not, then of course, this won’t be the first time I’ve been terribly wrong in money matters.

OP - all the best. Hope we all come out of this without many long term bruises. 👍

@Andrey Y. - I'm following your points - and although they may sound a bit harsh, i see how your point-of-view is relevant to the bay area and similar markets.

I'm generally a worrier though - and that's stopped me from taking action :-(. As an example, following your guidance - if I have 3-4 highly leveraged properties in the bay-area, minimal cash-flow and if an earthquake (1989-like) were to cause major damage - then I'd be SOL. or is there a way out? thoughts?

Thanks folks for chiming in! 

@Collin Chan - Thanks! trick is to find those good properties. As many here remind everyone - money is made

@Phil Collett - Heloc is an option - and i already have one - which I will request for subordination to the new first lien I get. 

@Johnson H.-  Will DM you

Hi RE gurus,

I've finally mustered up some courage and decided to get into RE investing. In prep for that: I have about 50% equity in my home (value 2Mil+) - and I have the following cash-out refi options for the remaining mortgage amount - locked. I'm in a dilemma as to what to do:

1. 2.5% 5/1 ARM with cashout upto 65% LTV - no cost, no points

2. 2.5% 10/1 ARM with cashout upto 70% LTV - $14k in cost and points

3. 2.625% 10/1 ARM with cashout upto 70% LTV - no cost, no points

Regd my primary residence - I don't intend to stay here permanently - about 10 years more.

With the cashout proceeds - I would like to buy an investment property or two (local, not out-of-state).

What would you do, if you were in my shoes?

Thanks!

-R

Yes; terrific rate for Inv. Property. But basic question - there are eligibility requirements (related to service in peace corps or armed forces) for VA loans, correct? So these loan products aren't generally available, I assume? or are they?

@Amit M. & @Nitin Narang: Thanks for the encouraging comments. I do want to keep house #1 if possible.

Currently my loan on house #1 is 5/1 ARM Interest Only; 3 out of 5 years completed; It has another 5-years of interest-only (rate resets every year of-course) left. So a total of 7 more years of Interest-Only payments. That's why the property is heavily cash-flow positive; otherwise it would be less.

One more Q? to see if any last-minute options still remain open. On house#2 - I have a rent-back arrangement with the sellers. So it doesn't become my primary residence for another 2 months. In other words, House#1 is still my primary residence for at least another 2 months. Can I swing this to my advantage, in any way? Reap the equity out of it - and be 'break-even' on house#1.

Thanks!

-R

Couldn't agree with you more, Bob. We started looking for house #2 - and given the seller's mkt here, we were expecting to be in the hunt for a few months. As luck would have it - we got into contract very quick. Didn't have a chance to get a (Bigger) HELOC on home #1 - OR as you suggest, get a bigger low-interest, long-term, owner-occupied, re-fi. Oh well, lesson learnt for next time...:-( but, it sure is a costly one!

First off, thanks all for your advice. Please see my responses below. Appreciate the dialog!! Apologies for the long-ish response - hope you guys don't get bored reading it :-).

Bob - I want to believe (I certainly hope) that bay-area prices keep appreciating over my life-time (and I'm in my 40s). My concerns arise out of sustainability - how long will this growth sustain? I feel like new folks are practically priced out of the market - and this will eventually affect the job-market. - BUT this is anyone's prediction, really. I'm fairly certain - long-term it would all be fine!

Brandon - Yep! you are correct...I'm not in trouble or desperate for money at the moment. But after buying house #2, our cash-reserves have reduced quite a bit... I'd have to peruse the biggerpockets forums a bit more, to venture out of state...but the prices sure sound tempting compared to the Bay Area. Wow!

Wes - The math started to become a bit complicated for someone new to the game, like me. IF I sell house #1, I'd have to plow the proceeds into reducing the mortgage on house#2 - since $1M+ interest carries no tax benefits :-(. Then after getting to steady-state (~2 months after close), I'd look for cheaper properties either here or further away like Brandon suggested. Also, I'm getting an accounting crash-course from reading online. Depreciation while renting, depreciation re-capture at sale, LOSS of the 500k cap-gains-free provision if renting beyond a certain period of time...Oh man, the list goes on...

Greg - As I described with a few $-figures in my original post, if I rent the property#1 out right now, I'd have a positive cash-flow of approx. $1500-$1700 / month. So I will make money, just if I look at this property alone. Of course - this assumes I'll have a renter each month - but right now, the demand for good-schools is solid. and yes, house value at purchase was just under $800k. BUT - you are correct. With 2 mega-investments (by my standards) in two different houses - I worry a LOT about a 2008-repeat, OR a BIG earthquake in SF... :-(.

Thanks again, all!

-R

Folks, Newbie here - so please be a bit soft on me...:-)

I own a home (#1) in the Nor-Cal South Bay-Area - which I bought a few years ago, for a little under $800k. Current mtg is $1300. Property tax is ~$900/mo. Add Home Warranty, Insurance, Gardener - to total upto $2400/month. Expected Rent is approx $3800-$4000 / month. So Cash-flow wise, I'm sitting ok if I only look at this property. Also, current Valuation of the house is approx. $1.4M.

Now- here's the complication - We just bought a bigger house #2 (our new primary residence) - for approx. $2.5M - with 20% down. The mortgage amt on this one, is approx. $2M. We know that mortgage interest is only deductible for upto $1M loans - so the interest on my second Million on this mortgage - is costing me post-tax $.

Annual household Income is approx $320k.

Both schools are in top school-districts (Elem/Middle/High are all rated 10/10).

I'm a bit nervous about holding house#1. I bought #2 at a high. Should I sell #1 when the market is up, too? It's a sellers market in the South Bay currently - but not sure how sustainable it is? How long it will continue...

If you were in my shoes - what would you do? Hold on to and rent house #1? or Sell it and pocket the $500k Cap gains and move on?

Thanks in advance!

-R