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Old 06-21-2015, 12:17 AM
 
Location: Phoenix AZ
5,920 posts, read 10,437,079 times
Reputation: 9226

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Quote:
Originally Posted by Thinking-man View Post
You can't compare those areas to northern Virginia. Please look it up and you'll see the way market reacted in 08 and the way it differs from Detroit, vegas, phoenix, and other cities you mentioned.
lol.. I know, VA is "special" and "unique", and real estate there can never crash.
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Old 06-21-2015, 12:54 AM
 
16,476 posts, read 17,501,756 times
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Quote:
Originally Posted by Thinking-man View Post
Thanks for the feedback....great as always.
first of all, to address those folks that suggest "...i'm gonna do what i want and that i don't listen to advice given here....etc. etc.", that's NOT true at all. I wouldn't be here if i didn't want different point of views. I would have no problem hearing someone out who thinks my proposal is stupid, as long as it's followed by sound reasoning and thoughts. But when you come here and say you shouldn't do it because your closing costs will be 20k on a 350k house, well....then you can't expect me to take you seriously.


Electrician,

I think most of the folks that "did in 2005-8 what i'm trying to do now" didn't have their houses paid off......they had bought a 300k house that was now "worth" 550k.....they had taken out sizable HELOCs on the equity....and with the interest rates creeping up, got into trouble.

YUP TRUE. THEY USED THE PAPER WEALTH OF THE INFLATED VALUE TO INVEST. WHICH IS ABSOLUTELY NUTS.

There are no penalties/costs associated with switching between interest only and fixed....and you can do it as often as you want with the HELOC that i have.

THATS GOOD. SOME REFI CHARGES CAN GET REALLY CRAZY.

My current plan (and it could change i guess), is to go with the purchase at around 350k with all closing costs covered by the seller as negotiated. I'd keep the 2.75 variable rate until and unless Prime goes up by half a point (currently at 3.25), at which point, i would fix to a 30 year fixed.

IF YOURE INTO IT FOR THE LONG RUN NOT JUST PUMP AND DUMP YOU MAY JUST MAKE OUT NICELY. I STILL DONT LIKE THE INTEREST ONLY DEAL. THAT STUFF JUST KILLS ME. BUT THEN IT ALWAYS HAS.

I'd be paying any monthly profits from the rental towards the principle as you had suggested, as well as any other remaining cash from salary, with the goal of paying off the HELOC in 10 years (Primary home was paid off in a little less than 6 years).

THATS GOOD MAN. IT WILL HELP YOU IN THE LONG RUN LATER IMO IF YOU WANT TO SELL. YOU CAN EVEN DO 75 YOU 25 PRINCIPAL. HELL ANYTHING TO PRINCIPAL IS BETTER THAN NOTHING.

in a worst case scenario, where interest rates jump up, housing plummets, and no renters are to be found (the 2 latter are very unlikely in Northern VA in my opinion), i'd consider selling (even at a loss), or covering the expenses with our decent size emergency funds/other investments

WELL YOURE RIGHT IT WOULD REQUIRE A PERFECT ECONOMICAL STORM FOR THAT TO HAPPEN, BUT IM PRETTY SURE THERE WILL BE SOME WARNING EVEN THEN.

.
Wasn't yelling just responding. Almost forgot. When you sell any depreciation on the rental will be recaptured also. Good luck. It's a risk but I hope it works out for you. If you got the finances you say you do I think you'll be ok with the risk
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Old 06-21-2015, 05:33 AM
 
3,483 posts, read 4,615,962 times
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Quote:
Originally Posted by Zippyman View Post
lol.. I know, VA is "special" and "unique", and real estate there can never crash.
I didn't say that. I said it's stupid to compare the northern va market with Detroit. Any noob can figure that one out.
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Old 06-21-2015, 07:56 AM
 
12,405 posts, read 9,195,957 times
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Quote:
Originally Posted by Thinking-man View Post
HAH!


-i've looked into getting a regular loan. with the rates offered now, and the 20% or 80k or so that i have put down, i would just about break even with the rent at best! (no profits monthly)


Thoughts?
But you are not accounting for the fact that you would be paying down principal. I think with a 15-year loan you could get a comparable rate. Yes, you might have negative cash flow, but so what? You have the open HELOC you could tap in a lean month or two, or three, or six. Which is more dangerous in terms of increased interest rates - the possibility of owing $10k on HELOC, or the certainty of owing $300k?

Plus you'd still have a cash emergency fund as long as you didn't spend it all on down payment and repairs.
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Old 06-21-2015, 08:14 AM
 
3,483 posts, read 4,615,962 times
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Quote:
Originally Posted by ncole1 View Post
But you are not accounting for the fact that you would be paying down principal. I think with a 15-year loan you could get a comparable rate. Yes, you might have negative cash flow, but so what? You have the open HELOC you could tap in a lean month or two, or three, or six. Which is more dangerous in terms of increased interest rates - the possibility of owing $10k on HELOC, or the certainty of owing $300k?

Plus you'd still have a cash emergency fund as long as you didn't spend it all on down payment and repairs.
Thank you. Yeah, that's an excellent point. I mean, I was planning on paying towards the principal anyway using the monthly cash flow and my regular income. I guess I might as well fix the rate and not have to worry about the variable rate which as others have mentioned is almost certain to go up in the next few months if not year or so. the 2.75 percent rate is just so damn attractive but it has drawbacks as I think we are all aware. if I remember correctly the rate for a fixed 10 year is around 3.8 with the home equity line of credit that I have. I think the 15 year comes with a 4.01 which I guess is still not bad considering there will be a big chunk going towards principal.
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Old 06-21-2015, 08:28 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
Reputation: 8078
Most lenders pick up the closing costs on helocs, as long as you don't close it in three years (not to say you can't pay it to $0 balance).

I think you need to look at your last tax return and have someone review your tax picture, provide them with preliminary HUD I's on each transaction, projected rents and taxes and so on. Have an appraiser (or trusted Realtor) provide you with fair market rent and vacancy rates. Only then, armed with full data can you really evaluate the risk and potential reward.
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Old 06-21-2015, 08:45 AM
 
Location: Phoenix AZ
5,920 posts, read 10,437,079 times
Reputation: 9226
Quote:
Originally Posted by Thinking-man View Post
I didn't say that. I said it's stupid to compare the northern va market with Detroit. Any noob can figure that one out.
Evidently at least one "noob" has a problem with reality, and I don't think it's me.

Whatever... maybe you can become a "reverse millionaire", like Casey Serin : Homeowner Bailout Rewards Irresponsibility - CBS News .

He went on and on for years about "Haterz" & "noobs" who he said were just there to **** on his dreams..

The assumptions in this post sound just like the speeches by the shysters on late night TV, and at the airport Marriot near *you* this weekend only, call NOW!...
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Old 06-21-2015, 08:47 AM
 
3,483 posts, read 4,615,962 times
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Quote:
Originally Posted by SmartMoney View Post
Most lenders pick up the closing costs on helocs, as long as you don't close it in three years (not to say you can't pay it to $0 balance).

I think you need to look at your last tax return and have someone review your tax picture, provide them with preliminary HUD I's on each transaction, projected rents and taxes and so on. Have an appraiser (or trusted Realtor) provide you with fair market rent and vacancy rates. Only then, armed with full data can you really evaluate the risk and potential reward.
Very good point. Thanks.
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Old 06-21-2015, 08:48 AM
 
3,483 posts, read 4,615,962 times
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Quote:
Originally Posted by Zippyman View Post
Evidently at least one "noob" has a problem with reality, and I don't think it's me.
And that's where you're wrong
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Old 06-21-2015, 10:15 AM
 
109 posts, read 111,060 times
Reputation: 145
Buying an investment property when the market is so high doesn't seem to be a good idea right now imo.
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