Depends on how much equity you have right now. Just make sure you"re well informed when considering a heloc. Are you looking at a fixed for refi?
Home buying thread
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I"m not 100% clear on a HELOC... i"m going to talk to a local bank tomorrow to get my feet wet. I know someone who has a heloc through them at ~3.25% and no fees which blows my mind.
I owe 54 on a house that i"m fairly confident would appraise for 100.
Yes i"m looking at fixed rate -- however all the typical banks are going to kill the benefit of that with 3 or 4k in closing costs for my range of shenanigans.
I owe 54 on a house that i"m fairly confident would appraise for 100.
Yes i"m looking at fixed rate -- however all the typical banks are going to kill the benefit of that with 3 or 4k in closing costs for my range of shenanigans.
Cutlery
Kill All the White People
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Renting property is a fucking hassle. I think Zeste managed some for awhile that didn"t go real well, and my mother in law has an extra house she was stuck with when the market crashed that she"s renting, and I"m pretty sure she"s losing money on that.
It ain"t as simple as "buy house, charge people money to live there." You"ve gotta upkeep the other property, fix all the stupid shit that needs to be done that they"ll complain about, and then they"re still gonna wreck your shit because they don"t own it and take no pride in the place.
I also looked into heloc awhile back, and the bank ain"t even gonna loan you a dollar unless you"ve got 20% into your house, and then they start from there, so about the best you can expect is 20-25k on the loan, not 45 if you were expecting that.
It ain"t as simple as "buy house, charge people money to live there." You"ve gotta upkeep the other property, fix all the stupid shit that needs to be done that they"ll complain about, and then they"re still gonna wreck your shit because they don"t own it and take no pride in the place.
I also looked into heloc awhile back, and the bank ain"t even gonna loan you a dollar unless you"ve got 20% into your house, and then they start from there, so about the best you can expect is 20-25k on the loan, not 45 if you were expecting that.
I can certainly understand that sentiment... My main benchmark for the subject is my dad has 3 rental houses and they"ve all proven successful. I know there"s a lot of shit you end up fixing and I don"t have a problem doing most of it so I"m not really scared of that aspect
Hmm.....I wonder if your dad and I are similar in ages, I have 3 (home) rentals myself also. I also have 2 commercial buildings I lease out to.
Anyways, the key to rentals is 1) buying good homes and 2) getting good renters.
The first you can have more control over. Obviously do your due diligence and don"t buy homes that need a lot of TLC, like a foreclosure might. Don"t buy homes in shitty neighborhoods just because the homes are cheaper there. Don"t buy homes/condos near universities, because college students make shitty tenants.
Finding good renters can be hard at times, it"s hit and miss. The absolutely best renters are previous home owners, especially families. They have more sense of home pride, and are more likely to take care of your home as if it was their own. If you do get a good renter, treat them like VIPs, don"t try to raise rent and squeeze every dime out of them, it"s better to keep them in your home at a lower rent because they won"t cause as much damage/neglect to your home.
As for your HELOC......it"s a complete gamble, as long as you realize that, then it"s up to you. You are taking equity out of your home to purchase another home to rent, if I"m reading your post correctly. It"s not really that much different than taking out a regular loan, except you can get a larger amount because of your home equity, so it"s just a higher dollar figure. More money, more risk. At least your father is good at renting it seems like, so you can get pointers from him. Worst case scenario if you get busy is you can get a management company to come in and help, they usually take about 7-8% off the top, at least in California. I use one only because I have a lot on my plate and I don"t have time to deal with the properties, but they are purely passive income for me, so I don"t mind losing a few percentage points just so I don"t have to deal with them.
Anyways, the key to rentals is 1) buying good homes and 2) getting good renters.
The first you can have more control over. Obviously do your due diligence and don"t buy homes that need a lot of TLC, like a foreclosure might. Don"t buy homes in shitty neighborhoods just because the homes are cheaper there. Don"t buy homes/condos near universities, because college students make shitty tenants.
Finding good renters can be hard at times, it"s hit and miss. The absolutely best renters are previous home owners, especially families. They have more sense of home pride, and are more likely to take care of your home as if it was their own. If you do get a good renter, treat them like VIPs, don"t try to raise rent and squeeze every dime out of them, it"s better to keep them in your home at a lower rent because they won"t cause as much damage/neglect to your home.
As for your HELOC......it"s a complete gamble, as long as you realize that, then it"s up to you. You are taking equity out of your home to purchase another home to rent, if I"m reading your post correctly. It"s not really that much different than taking out a regular loan, except you can get a larger amount because of your home equity, so it"s just a higher dollar figure. More money, more risk. At least your father is good at renting it seems like, so you can get pointers from him. Worst case scenario if you get busy is you can get a management company to come in and help, they usually take about 7-8% off the top, at least in California. I use one only because I have a lot on my plate and I don"t have time to deal with the properties, but they are purely passive income for me, so I don"t mind losing a few percentage points just so I don"t have to deal with them.
HELOCs are always variable rate. So even if it"s Prime + 3.00% which is what you get 3.25% right now, if (and when) prime goes up, it"s going to cut into your cash flow. That 3.25% is the lowest the rate is ever going to be.Picasso said:
My family had about 10 rental properties. Most of them ended up being huge grow ops. The cleanup on the properties was a pain in the ass. So yeah, finding good renters is SUPER important.
Pasteton
Blackwing Lair Raider
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Say hypothetically you are buying a 1.5 mil place-
So say you put 300k down, then you have a 1.2 mil loan
At 4.375% APR, monthly mortgage is 5991
Property tax (1.2% CA) 18,000/yr
Condo, so HOA 1500/month
Average monthly cost - 9k/month
So what monthly income do you think is needed to comfortably pay for this type of living situation? Assuming 2 people, no kids, but ideally saving money for a family in the future etc.
So say you put 300k down, then you have a 1.2 mil loan
At 4.375% APR, monthly mortgage is 5991
Property tax (1.2% CA) 18,000/yr
Condo, so HOA 1500/month
Average monthly cost - 9k/month
So what monthly income do you think is needed to comfortably pay for this type of living situation? Assuming 2 people, no kids, but ideally saving money for a family in the future etc.
Mortgage Required Income
9,000 * 12 = 108,000 annual mortgage expense
At a comfortable 25% DTI:
( 108,000 / .25 ) = 432,000 in annual income, assuming no other monthly debts.
9,000 * 12 = 108,000 annual mortgage expense
At a comfortable 25% DTI:
( 108,000 / .25 ) = 432,000 in annual income, assuming no other monthly debts.
Big Phoenix
Pronouns: zie/zhem/zer
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Why in the hell would you spend 1.5 million dollars on something only to have someone else tell you what you can and cant do with it?
cause you want a big ass house.
Why buy a car when the police tell you how fast you can drive?
Why buy a car when the police tell you how fast you can drive?
ToeMissile
Pronouns: zie/zhem/zer
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Cutlery
Kill All the White People
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The real answer is that no one with a million dollar+ mortgage actually pays the mortgage. All they play is tax games with it. They get an ARM, write off the interest, when the ARM is up, they refinance it.
I dunno how the fuck that makes any sense at all, but when my wife was a revenue agent, that"s pretty much all she saw on anyone with any money at all. Zero equity in the home.
I dunno how the fuck that makes any sense at all, but when my wife was a revenue agent, that"s pretty much all she saw on anyone with any money at all. Zero equity in the home.
ToeMissile
Pronouns: zie/zhem/zer
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Creates some kind of loophole for tax purposes? Something that happens only in certain areas/states? *shrug*
Cutlery
Kill All the White People
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Mortgage Interest Deduction.ToeMissile said:
Don"t ask me how they think spending a shitload on interest is better than paying a fraction of that shitload to the federal government, but some people just have a serious problem with paying taxes, and would rather pay it to bankers instead. It"s pretty fucking prevalent.
Turned down a recent refi on a Hollywood condo that lost 70% of its value (precisely why we wouldn"t touch it). I"m curious where someone even finds a condo in CA for 1.5m when you can get a 8k+ sqft home on a decent lot in Coto for under that now. Maybe it"s some goofy ass suite in a highrise or something, but they don"t typically call those condos (not around here at least).
This is a pretty confusing hypothetical.
This is a pretty confusing hypothetical.
ToeMissile
Pronouns: zie/zhem/zer
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Sunset Beachfor one. Basically anywhere along the beach or upscale downtown areas. And there are a lot of residences that don"t fit into a single category.Ravvenn said:
Ok so...
Need some help... We just found a home which has 3 bedrooms/2 baths which is fine for now, however eventually we want 4 bedrooms + bonus room or a 5 bedroom with bonus room.
It has an unfinished second story, which is about 1300 square feet, thinking we could get 1k out of it after we leave some storage space.
It already has the initial water pipes ran upstairs, supply and sewage, but nothing else. How much do you think this would cost? Just a round about? The home is already within the top 5 in the neighborhood for price, but its a perfect house for us right now. It is on an acre lot, with a fenced back yard, and a screen porch soo we like it, just need to know how much this will add down the road to the cost.
Need some help... We just found a home which has 3 bedrooms/2 baths which is fine for now, however eventually we want 4 bedrooms + bonus room or a 5 bedroom with bonus room.
It has an unfinished second story, which is about 1300 square feet, thinking we could get 1k out of it after we leave some storage space.
It already has the initial water pipes ran upstairs, supply and sewage, but nothing else. How much do you think this would cost? Just a round about? The home is already within the top 5 in the neighborhood for price, but its a perfect house for us right now. It is on an acre lot, with a fenced back yard, and a screen porch soo we like it, just need to know how much this will add down the road to the cost.
Cutlery
Kill All the White People
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The cost pretty much doesn"t matter. If you can do it when you have the money, then you can just nickel and dime the project with the spare cash outta the budget and have it done before you need it. I mean, could run 10k or whatever, but if you break that down over several years as you do a bathroom here, carpet there, etc, it"s not really gonna be a huge drain on your finances unless you"re strapped buying the house to begin with, which you obviously don"t want to do.Wizarddeath said:
The long and the short of it is that unless doing the work itself is going to be a major dealbreaker, get your house. Easy to change the inside, hard to change the lot/outside.