I have a rental property in the Central Florida area worth $160,000 and the mortgage on it is $44,000 @ 7%. What would be the best way to use the equity? Refinance and purchase another?
2007-08-09 03:41:08 · 8 answers · asked by Nigel 1 in Business & Finance ➔ Renting & Real Estate
I would refi and invest in another property. With the bottom dropping out of the mortgage industry like it has, I would look into foreclosures. There are tons of them out there right now.
If you buy another property and rent it out, you should be fine. But, if you are thinking about buying one and flipping it, be careful. The market in Florida isn't great right now and you may end up having to carry the mortgage for a while until the market picks back up again.
2007-08-16 03:02:02 · answer #1 · answered by kelly h 3 · 0⤊ 0⤋
When properties values are low, I have been told is the best time to purchase properties. Property values are low!!
I would consider the purchase of 3-4 units and yes I would use the equity from my rental.
Most of the cost to get the refinance is tax deductible (Check with your tax consultant). the rates are still pretty low with a good credit score even for a non-owner occupied property.
1-4 units are considered a single family unit for financing purposes.
Though an equity line might be easier to obtain the rate is also higher. Don't get into that trap. for short term money that will be paid back soon-good idea, long term-bad move.
There are many deals to be made, find the best one that suits your needs and go for it.
The best time to purchase a house was yesterday. The next best time to purchase a house is today.
Please don't look for a reason not to purchase a rental property. Insurance might be high, but for a rental it is tax deductible item.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-08-09 05:54:12 · answer #2 · answered by loanmasterone 7 · 0⤊ 0⤋
In theory, that is what I would do. And, with that kind of equity, if you pulled all of the equity out, you would have a nice downpayment to buy 2-3 properties, not just one.
But, knowing that you are in Florida, I don't know that I would buy any property there - rental or not - for awhile. It needs to settle down some. I know the prices have dropped drastically, so now appears to be a good time to buy. And, if people don't own, they rent, so that is to your advantage, too. But, are the insurance rates in that area not outrageous right now? Would it even be profitable to buy rental property right now or would the cost of insurance eat up the profits and then some?
2007-08-09 03:50:35 · answer #3 · answered by sortaclarksville 5 · 0⤊ 0⤋
First, be sure it's still worth $160,000. Do you live in the same market and know what's going on? Or do you live somewhere else? If it was mine, I would borrow against the equity up to what it might sell for in a soft FL market (excpet for a few areas, most of FL is soft). And then buy in LA, MS, or AL in the GO zone. You can write off the bulk of your purchase on taxes. With mortgage problems, rentals market is improving. If you live where your other rental is, buy there at a great price... good plan
2007-08-14 10:02:16 · answer #4 · answered by GA_metroman 2 · 0⤊ 0⤋
It depends on the refinance rate and what you are getting for rent. How is the real estate market down there? Are prices looking good for buying another property? I would suggest looking at what is available for sale and talking to a realtor to get their views on the market. You could speak with your banker to see what the rates are for refinancing and how much capital you could get. You should check out the rental market. Will you be able to find a renter? How about investments? Ideally, you would want to compare where you will see the better return with the least amount of risk.
2007-08-14 08:07:05 · answer #5 · answered by Unsub29 7 · 0⤊ 0⤋
Since the rates are pretty high right now, you should keep that 7% rate, i would try an equity line, which won't cost you anything at your bank. And use it when you find a good deal on another house.
2007-08-09 05:16:50 · answer #6 · answered by Anonymous · 0⤊ 1⤋
Try reading the book, "What Color is Your Parachute" by Bolles. By the way, real estate and finance go hand in hand. Good luck finding your career.
2016-05-17 22:25:32 · answer #7 · answered by ? 3 · 0⤊ 0⤋
Someone once told me, you should never sit on your assets.
If you have more than 25% equity in your real estate, you should re-invest it.
2007-08-15 10:06:43 · answer #8 · answered by massomia 3 · 0⤊ 0⤋