Get A Mortgage Or Not?
Hello,
I have a free and clear home that I am looking to make a rental. It needs about 2k or so in fixups to be ready to go... maybe not even that much.
I have considered getting a loan (about 40k) on the home. I would use this to pay for the fixing, start a healthy reserve fund for repairs/damages, and maybe pay off a small credit card I have.
Since I am looking to rent this out, would I be better off just making the repairs without getting the loan (probably have to use a credit card)? Or would I be better off with that cushion I'll get with the mortgage?
I was considering using the mortgage towards another rental purchase, but I am unsure the best way to handle it. The current house is valued around 60k.
Thanks!
How much are you getting for rent right now and would it be enough to cover the monthly pymnts as well as reserves and other costs and still give you positive cash flow?? If your answer is yes then I would say to go ahead and use the cash you receive to invest in another property.
[addsig]
Right now I have no renter... I just got this house about a month ago upon my mother's passing... She had just moved into a new house a few months before that.
Taking the mortgage into consideration, I would have about $250 a month in positive cash flow. Without the mortgage, I would have $750 per month, but I would have to establish a reserve before using any of that monthly money.