Buying new house and renting out old one? (tenants, appraisal, 6%)
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My wife and I are looking at buying a new home. This is a great time to buy for us since our income is relatively recession-proof (I'd wager to say that mental illness goes up in a recession...). The downside of that is that it's an awful time to sell.
We've got a fair bit of equity in our current house. We need to refinance since our ARM will adjust in 2 years. With interest rates being relatively low, it seems like a good time to do that.
We're pretty solvent, cash-wise, but we don't have enough to make a sizable down payment on another house, without taking money out of our current home.
What we're thinking:
- we'd keep our current house and rent it out using a property manager.
- we'd refinance and take some of the equity out of the current house and use it as a down payment.
Is this a sound financial move? If the house went unrented for a few months at a time, we'd be fine floating the payments for both houses, so we're not overextending ourselves.
Do we refinance first and then buy? Or do we buy and then refinance? Any other thoughts I'm missing?
Some more detail:
We've got about 34% equity in our current house, if we use the tax appraisal - 5%. If we cash out down to 20% equity, we'd put that towards about half the new down payment and use savings to put the rest down, up to 20% to avoid PMI.
We live off of Guess Rd. near Whipporwill park, so it's a very safe area and convenient to Duke and I-85.
There are no homes on our road either for sale or rent, but last month, it looks like 2 houses were sold, one for the low estimate of value I posted and one for considerably more. (In our opinion, our house is one of the most attractive on in the neighborhood. But I'm not biased or anything...)
I have friends who've done this with a house in Woodcroft. It works if you get good tenants, which can be a roll of the dice (they took a chance on a family that had to file bankruptcy, who've been in the house for two years now, and will likely stay for three more). An important question is what are you planning on renting it for, and will this cover the mortgage payment?
I have friends who've done this with a house in Woodcroft. It works if you get good tenants, which can be a roll of the dice (they took a chance on a family that had to file bankruptcy, who've been in the house for two years now, and will likely stay for three more). An important question is what are you planning on renting it for, and will this cover the mortgage payment?
It would most certainly cover our mortgage payment, otherwise we'd never do it. I'm thinking of talking to a prop manager to get a sense of what they think it'll rent for and what our expenses will be. We're fortunate because we bought the house 3 years ago from my sister-in-law for what was well below its value, so our mortgage is less than we paid in rent when we were renting. For a 1600 sq. foot house, we should be able to get that much at least.
My wife and I are looking at buying a new home. This is a great time to buy for us since our income is relatively recession-proof (I'd wager to say that mental illness goes up in a recession...). The downside of that is that it's an awful time to sell.
We've got a fair bit of equity in our current house. We need to refinance since our ARM will adjust in 2 years. With interest rates being relatively low, it seems like a good time to do that.
We're pretty solvent, cash-wise, but we don't have enough to make a sizable down payment on another house, without taking money out of our current home.
What we're thinking:
- we'd keep our current house and rent it out using a property manager.
- we'd refinance and take some of the equity out of the current house and use it as a down payment.
Is this a sound financial move? If the house went unrented for a few months at a time, we'd be fine floating the payments for both houses, so we're not overextending ourselves.
Do we refinance first and then buy? Or do we buy and then refinance? Any other thoughts I'm missing?
Some more detail:
We've got about 34% equity in our current house, if we use the tax appraisal - 5%. If we cash out down to 20% equity, we'd put that towards about half the new down payment and use savings to put the rest down, up to 20% to avoid PMI.
We live off of Guess Rd. near Whipporwill park, so it's a very safe area and convenient to Duke and I-85.
There are no homes on our road either for sale or rent, but last month, it looks like 2 houses were sold, one for the low estimate of value I posted and one for considerably more. (In our opinion, our house is one of the most attractive on in the neighborhood. But I'm not biased or anything...)
What do you guys/gals think?
We're probably looking at a similar situation. Have you interviewed any property mgmt companies yet? If so, DM me. I'd like to hear your opinions.
A. Already have money for a down payment
B. Take out some money out of your home
C. Rent it
D. Take the money you have, the money you took out of your old home and buy a new one
E. If you had enough money saved up and you took out $100k (Depending on how much your home is worth) you should have a pretty low payment (again depending on how much the home you bought cost)
F. Use the rent you get from your old home and pay your new home off.
If you match everything up directly, meaning for example you rent your home for $1300, and $1300 is your mortgage payment then your set. (you still have to pay property taxes and other bills)
We're probably looking at a similar situation. Have you interviewed any property mgmt companies yet? If so, DM me. I'd like to hear your opinions.
I haven't had a chance to talk to anyone yet but I've got a friend who's had very good luck with Allenton Mgmt. They've got an awful website (if I were in real estate, a good web presence would be the first thing I did!), but that's not necessarily indicative of their "goodness" or "badness".
That said, if I were a potential renter, the first thing I'd do is hit the web, so....
I am in a quandry. I refinanced my house in january the bank raped me with a 6% int. Rate. They lowered my pay back time to 10 years on a 67k loan. I now want to buy another home.? Is it do-able. My currant pmt is almost $800 amonth i pay my taxes and ins. Seperate. Oh, what to do.
I am in a quandry. I refinanced my house in january the bank raped me with a 6% int. Rate. They lowered my pay back time to 10 years on a 67k loan. I now want to buy another home.? Is it do-able. My currant pmt is almost $800 amonth i pay my taxes and ins. Seperate. Oh, what to do.
Pun intended, you consented to this rate.
Your credit score is a factor of the rate you pay. Not everyone qualifies for the deep discount rates that are advertized. Is this possibly a factor in your case?
To the OP - interest rates are low, but I think they increase when you take cash out. Check with a mortgage broker before moving forward. Also, the banks are not very willing to consider rent as an off-set to your current mortgage, so you might have to qualify in addition to that home. Once again, before making a decision, check with a mortgage broker to run all the numbers for you and figure out exactly what your ongoing cost will be vs. rental on the old home.
Good luck.
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