Am I Doing It Right (newbie)
I own three residentials properties that i have bought using equity from 1 to another to another. Now i own three and have decided to rent them all. I used equity cash to buy them at 8%. I have decided to take two of them and convert them to 15 year home loans. I would not have more than 50.00 positive cash flow but in 15 years I would have properties to pay for kids college. They are in a nice area suburb. Also I if I wanted to have a net worth of a million in ten years, what is the most successful way to do this with residential properties?
[ Edited by sidman71 on Date 08/05/2007 ]
I doubt that you would be able to get much better than about 7.25 on an investor loan without points, assuming your appraisal is high enough for 75% LTV. Unless the homes are very high value, it could take many years for the interest savings to equal the cost of the refinancing. Also, the apparent income reduction of increasing your required payment will affect your ability to borrow for more houses.
In my opinion the fastest way to increase your net worth with residential properties is to "add value" through rehabbing run down properties in decent neighborhoods. Using your cash flow and equity to borrow money to invest in additional underpriced properties will increase your net worth much faster than paying down your loans. Unless you can earn your way to that million working, you will need to borrow money and invest it wisely to get there- and the more you can borrow, the easier it will be to reach your goal.
Chris
I appreciate the tips and information. I believe you are right on the finance for 30 but pay extra if i want. that sounds like a good plan. Also i have hewrd about people that buy a house for say 50,000 fix it a little , then the house appraises for 80,000. They then refinance it for 80,000 and take the equity out. To me this would increase the rent demand and leave you paying for that extra money you took out. The only benefit to taking the money out is to buy another property or to put it in an account unti you amass enough to buy another property. What is the best way for me to continue? Is it to cash out equity or keep buy the next home from this home equity and keep it going. The way ive done it so far is to use my residence to get an heloc to buy a property, then i used that property equity to buy another, then i used that property equity to buy another. Is this the way I should keep doing it? I really want your advice to know how i should do it to build my investments. Currently I am in my late 20s and want to create something for my children. I still yet to read the book rich dad poor dad but it sound like a good one.
Thanks for your help.
I posted this in "Rehabbing" also. I had a reply but my post was erased. Any info anyone could provide is appreciated.
Thanks,
Wayne
Ohio Choice Homes
hard money is most likely your only option. Banks are notoriously unwilling to lend below $100K.
Unless the $8,000 left over from the loan is going to be used for living expenses and the $8,000 that was saved for living expenses will now be invested in real estate.
You guys must have crystal balls somewhere because I did not see him specify an amount, aside from a "couple" of grand, not did I see him mention anywhere he was using student loan money. I would love to know how you did that? Maybe, you could tell me what the next hot real estate market is????