I just recently purchased my first home, a townhouse. I borrowed $12k from my 401k to help pay for the closing costs. My concern is this: what are some of the common problems with buying a rental property, once my 401k is paid back? My goal is to have a second property so I can have the tax break from TWO properties. OR, should I take any extra money I get next year and put it towards paying down my second loan (the 20% loan I took out to help avoid paying PMI)?
2006-06-20 09:03:51 · 5 answers · asked by Michelle's boyfriend 2 in Business & Finance ➔ Renting & Real Estate
your debt to income and debt to asset ratios are going to be quite high and as such, the pricing you would get on a loan would be higher than you would like to pay. best thing is to pay off the 20% and build equity in your house that you can either leverage or use to buy into another property. also, your LTV on an investment prop would be about 75%, which means that you need to come to the table with at least 25% of the purchase price plus CC.
2006-06-20 09:13:15 · answer #1 · answered by boston857 5 · 2⤊ 1⤋
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2016-07-18 20:53:36 · answer #2 · answered by ? 3 · 0⤊ 0⤋
The major pitfall is getting qualified for the loan, but if you can get qualified you'll be ok.
The other pitfall is you may spend more time at the rental property for mundane things like repairs, leaks, etc.
I would go a more passive route albeit stay in real estate. Commercial property may be a better way to go if you have funds or you may partner with someone else. Even if you stay in your rental property, partners can help manage and make it easier.
2006-06-20 09:17:04 · answer #3 · answered by Dax 3 · 0⤊ 0⤋
The biggest problem I think you may have is being pre-qualified for another mortgage. Unless you can buy a rental property cash, you're better off to pay down the other loans.
2006-06-20 09:14:53 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Rent-To-Own Home : http://RentToOwnHome.uzaev.com/?DVlG
2016-07-12 19:03:05 · answer #5 · answered by ? 3 · 0⤊ 0⤋