All Forum Posts by: Shekhar Ramaswamy

Don't try to force fit the analysis to show a positive outcome - too enticing when you are itching to invest and your mind wants to take risks on things like % of rent to put away for big repairs (as an example) 

@Josh Young - Thank you for the tip - I ran the numbers and the ROE actually gets marginally better even with the high interest rates we currently have. In addition, I get to pull out almost 40years worth of yearly principal accumulation that I can now invest elsewhere. This was a great framing that I was completely missing - wish I had paid more attention in my Finance classes.

Thanks Jeffrey! But wouldn't HELOC actually be at a higher rate than a new mortgage? So if I used HELOC as a way for down payment, wouldn't the cash out on financing (both HELOC and the second mortgage) be higher? Just curious what others are doing in this high interest rate market where cash flow is going to be negative for 95% of the properties (single family homes)

I have a rental property that has approximately $520K in equity. Currently the cash on cash is almost 30%, but that is also because the purchase price was only $240K in 2004, with 20% down. If I cash out refinance and go back to 50% LTV the cash flow goes to almost zero. If I then use the cash as 20% down for a second property, I will most likely be cash flow negative (in Phoenix) due to the high interest rates. This feels like going backward. What am I missing? Is there a better way to evaluate if taking out the cash and reinvesting will actually give me a better ROI than where I am today?