All Forum Posts by: Wayne Brown

@Monique O'Dell Rich Dad Poor Dad and Set for Life were great at getting me on the right path mentally. I'll read them every year for the rest of my life.

So a home that was on my radar a year ago was just re-listed as a bank foreclosure but now an online auction. I've never purchased via auction but I am interested in giving it a shot. Besides the condition of the home what all should I be researching before placing a bid on a online auctioned home? e.g. Liens etc. Thanks for your assistance.

@David James There was a multi family side by side duplex listed in Hollywood MD a few week's ago I sent to a friend. Not sure if it's still on MLS.

@Sean McCluskey Great feedback. Thank you so much. Your strategy makes a ton of sense. If for any reason to use my 401K loan it should be to acquire another asset not pay down one that's already cash flowing beautifully.

@Ken Hobbick Thanks. Very valid points. I guess I should clarify that it is a home equity loan and not a mortgage. So unfortunately I cannot write off the current interest. But very valid point the 401k loan could be better served as another downpayment on another asset.

Right. We don't know what to expect in earnings in the 401K over the next few years. It could dip 12K over that period. The house cash flows over $500 a month after expenses. So I thought to have it free and clear would increase the cash flow to about $750 without any mortgage and allow me to potentially get a better interest rate on my next loan. If I were to get a loan with 1% less interest rate on my next rental over this home being free and clear it would save lots of future money in the next investment were my thoughts. What do you think?

With being a new investor and all for the buy and hold long term strategy it definitely would give me sense of comfort having this level of cash flow from one home while using leverage on multiple others and facing a potential downturn.

 Hey Ralph, I guess it will be unknown rather the 401K would earn 6% or possibly lose 6% in a potential recession. We can pull only one loan at a time. I would never borrow much more than 12K from 401K loan simply because it needs to be paid back in full within 5 years regardless of how much you are borrowing.

@Joe Villeneuve thanks Joe. Over 3% rule house so it cash flow really well. I'm hoarding cash at the moment so I don't necessarily need the cash flow to save for my next few downpayments. Home was through the loss of a family member so I only had to take on remaining mortgage which was not very much. Once I make my next downpayment on another rental I will definitely begin building the pot back up with the cash flow from this home.

Hello everyone! Which of the two options in this scenario would make more sense with the mortgage on my rental home.

I currently have 12K remaining on the mortgage of my first and only rental property after multiple lump sum payments. My goal is to purchase many more rental properties and I look forward to owning them free and clear. So here are the two options!

1. Leave home on 5.69% interest rate mortgage. 12K mortgage would be paid off in 5 years without any additional principal payments. But I am sure I will make additional payments toward principal. 5.69% interest will be paid to bank. 

2. Take out a 5 year - 401K loan at 6% interest. Pay the remaining 12K of mortgage. The 6% interest will be paid back to me in my 401K account instead of a mortgage lender. Own a free and clear investment property. Improved credit score with 12K less debt on paper when applying at the bank for my next loan for an investment property. 

Which route would you take and why? Thanks for your feedback! 



 

@Trey Dyer Best of luck and thank you for your service! 👍🏽