All Forum Posts by: Sarah Auriemma

I would argue your current place is not a perfect rental property since it doesn't cashflow as a rental. It also holds the key to your opportunity to get started given the equity you have. It's up to you how to want to proceed, but I would seriously look at selling and using the money to get a small MF and house hack. Or, find something you can purchase that needs a little help and force some value into the property while you live in it.

Adding financial stress to your situation with additional debt payments when your monthly budget is already tight could be a recipe for life disasters. Using a HELOC for buy and hold investments, especially when you don't have breathing room to weather a storm, is not the best next step.

Denis, thank you for the thoughtful reply. So, in general you wouldn’t recommend using a HELOC to buy another primary residence/rent current residence unless the rental yielded cash flow. Is there a minimum amount of cash flow you recommend, like even if it were $100/month profit?

listening to the podcast I always hear people talking about how they got started with little to no money in their savings. I guess I’m confused on how one would cover the monthly mortgages/HELOC loan payments.

That's a tough questions as there are a lot of variables and I don't know your situation intimately. It sounds like money is tight, which I assume means you don't have 3-6 months worth of expenses in savings. If that is also true, I think the risk you expose yourself to for $100/month simply isn't worth it.

If your income were higher and/or you had a way to weather the proverbial storm (savings), it might be worth it just to get in the game. But one storm could easily wipe out your $100/month cash flow, or push you cash flow negative for the year.

My wife and I used our HELOC to remodel our condo to rent out and also to fund the downpayment on a rental. I wouldn't do that again (rental down payment), but we did it. However, out situation is different as our income is higher so we can cash flow a mistake and be ok. I would hate to see you pull the trigger on something, trying to get ahead, and it actually push you backward.

Can you partner with someone to get started by providing some sweat equity? Can you start a side hustle to get more income?

Hi Denis,

Thanks again for the thoughtful response. We do have 6 months of expenses in savings. Does that change your advise to us at all? Our monthly income is just not expected to increase anytime soon as I am working part time/taking care of the kids and my husband is not in a field where he sees big annual bumps in pay like some professions. I expect in 5 years when the kids are in school to go back to working full time, so that’s another consideration. But as of right now, we are cramped for space in our current home and trying to make a good decision for our future.

0 Votes

Jersey City, New Jersey

Quote from @Nathan Harden:

It sounds like you just answered your question. You said that you just don't have the money for HELOC payments right now. Boom. There's your answer. Heloc is out the window.

Remember, rates are dropping so doing a refi on your primary may just be what you're looking for.

All the best!

I looked into refinancing but our monthly payment would actually increase because our current rate is so low. Any advice on that?

0 Votes

Jersey City, New Jersey

Quote from @Denis Ponder:

Thanks for posting and welcome.

0 Votes

Jersey City, New Jersey

My husband and I own a SFH- it's a ranch 2/1 with a 2.75% interest rate. We owe 200,000 on it and have $100,000 available to us via a HELOC. We make a very modest income (about 80,000/year) and have 2 small children. We can't afford much more in a mortgage payment than what we're paying right now. Trying to figure out next steps between these options:

1. Use HELOC as down payment for new primary residence in the 350,000 range and keep our current house as a rental. Current house could rent for +$800-$900/month which would likely be enough to cover the mortgage and HELOC interest payments but we wouldn't be making any money. If the new house needs work or we can't find renters we would need to pull from our small savings which could be stressful.

2. Use HELOC to add an addition onto our current home to make it a 3/2. In this scenario we would need to be able to cover the monthly HELOC payments which we just don't have the income for right now.

3. sell current house but we really would like to hold on to it. It’s in a great neighborhood and is a perfect rental property.

How do families make RE work that don’t have excess money in their budget at the end of the month?

2 Votes

Jersey City, New Jersey

All Forum Posts by: Sarah Auriemma

Sarah Auriemma has started 1 posts and replied 4 times.

Post: Modest income trying to make the right decision for my family

Post: Modest income trying to make the right decision for my family

Post: Modest income trying to make the right decision for my family

Post: Modest income trying to make the right decision for my family