Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Unfortunately, i think you have your numbers wrong.
A "regular" mortgage for an investment property would mean that i have to put down 20% (about 70k CASH). Also, the rate for a 30 year loan would be 4.75% (as of this afternoon), translating to about 1600 in principle and interest, plus about 500 in taxes and insurance, totaling about 2100 in monthly payments. The "profits", if any, will be in the 100 to 200 dollar range, as opposed to the 800-1000 range.
Is there anyone here who can point out the negatives of my plan described earlier (in details)?
I would appreciate it.
Somehow your expense outside of the loan taxes/ins went up from 400.00 a month a few posts up to 500.00 with traditional financing. Albiet not much part of your increased monthly cost of the fixed rate includes paying down your loan so what you are netting profit it's not accurately reflected. Either you don't understand the basics here or again your bias is showing
I'd avoid having any debt that isn't really necessary, but if I really wanted to take a risk with that money I'd either buy income producing real estate (higher end stuff that would attract better tenants who are more likely to pay their rent/lease), or buy a portfolio of dividend paying stocks that provide 6% to 9% return per year. I'd select those that have a long history of flat or slowly rising prices (or aren't volatile especially in down markets).
Know what you can afford to pay monthly even if the income dries up and you still have expenses associated with your investment. If you can't cover all or most of those out of other income, then the risk is too high, IMO.
I'd avoid having any debt that isn't really necessary, but if I really wanted to take a risk with that money I'd either buy income producing real estate (higher end stuff that would attract better tenants who are more likely to pay their rent/lease), or buy a portfolio of dividend paying stocks that provide 6% to 9% return per year. I'd select those that have a long history of flat or slowly rising prices (or aren't volatile especially in down markets).
Know what you can afford to pay monthly even if the income dries up and you still have expenses associated with your investment. If you can't cover all or most of those out of other income, then the risk is too high, IMO.
Your 6-9% yielding stocks is as bad of a recommendation here as it was in the personal finance forum you duplicated the idea in. Can you name these appreciating names that pay 6-9% while not volatile in down markets
I'd avoid having any debt that isn't really necessary, but if I really wanted to take a risk with that money I'd either buy income producing real estate (higher end stuff that would attract better tenants who are more likely to pay their rent/lease), or buy a portfolio of dividend paying stocks that provide 6% to 9% return per year. I'd select those that have a long history of flat or slowly rising prices (or aren't volatile especially in down markets).
Know what you can afford to pay monthly even if the income dries up and you still have expenses associated with your investment. If you can't cover all or most of those out of other income, then the risk is too high, IMO.
Thanks for the response. I appreciate it; although I think putting money from a HELOC into the market is WAAAAAY too risky for 'me'!
Last edited by Thinking-man; 06-20-2015 at 01:06 PM..
.... in Las Vegas!! !VEGAS! !VEGAS !VEGAS! !VEGAS!
I was in Vegas, I found it's very expensive place to go when you have tight budget. I will never go to Vegas again. But if I get 400K as a gift, I will go tomorrow to Vegas . :-)
I was thinking about another alternative with regards to my potential investment.
Instead of using the 400k HELOC to purchase the property, what if i used 70k of the HELOC to use as down payment (at a very low rate with the intention of paying it off within 1.5 years), and mortgaging the rest using a regular 30 year mortgage at 4.75% since it's an investment property?
i know everyone was against using the HELOC to pay for the rental, and i agree that it has risks. This idea can perhaps reduce the risks somewhat?
I was thinking about another alternative with regards to my potential investment.
Instead of using the 400k HELOC to purchase the property, what if i used 70k of the HELOC to use as down payment (at a very low rate with the intention of paying it off within 1 year), and mortgaging the rest using a regular 30 year mortgage at 4.75% since it's an investment property?
i know everyone was against using the HELOC to pay for the rental, and i agree that it has risks. This idea can perhaps reduce the risks somewhat?
Any thoughts are welcome.
I like that idea better. In your area will they let you do a 7/1 or 10/1 arm for a second property?
I was thinking about another alternative with regards to my potential investment.
Instead of using the 400k HELOC to purchase the property, what if i used 70k of the HELOC to use as down payment (at a very low rate with the intention of paying it off within 1.5 years), and mortgaging the rest using a regular 30 year mortgage at 4.75% since it's an investment property?
i know everyone was against using the HELOC to pay for the rental, and i agree that it has risks. This idea can perhaps reduce the risks somewhat?
Any thoughts are welcome.
I wouldn't do it. You mention really low interest, that is essentially guaranteed to go up and that you can lock at 4.5%. To me the elephant in the room is that this is interest only. How do you plan on paying back the principal? If you're set on getting the rental, and the economics work out on conventional rental mortgage, why not just do that? $1200/month seems REALLY LOW for $350k property.
I wouldn't do it. You mention really low interest, that is essentially guaranteed to go up and that you can lock at 4.5%. To me the elephant in the room is that this is interest only. How do you plan on paying back the principal? If you're set on getting the rental, and the economics work out on conventional rental mortgage, why not just do that? $1200/month seems REALLY LOW for $350k property.
What are you talking about? I can't make sense of it. Sorry.
How am I paying the principle? I presume you're talking about the 75k. Right? If so, I'm planning on paying it with income cash flow over 1.5 years. "If you're set on getting the rental, and the economics work out on conventional rental mortgage, why not just do that? "
But, that's what I said i was thinking about doing, in the post you quoted. What do you mean?
where is the $1200 on 350k figure coming from?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
