| Here's my situation....what would you do? |
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RandRmoney
Contributing Member
Cash: $ 7.65
Posts: 33
Joined: 03 Mar 2011
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| Here's my situation....what would you do? |
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I own two rental properties balance 55k 7% and 112k 7%. Rent profit approx. 400 total for both.
Credit score mid 700's
50k in mutual fund with local bank. Income generating for now.
60k in savings account.
Married with 2 kids. 2yrs and the other 1 month.
Primary income Social Security disability.
Looking to buy more property in my area. Market is good right now.
Whats my next move?
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Fri Jun 24, 2011 3:08 pm |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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I would refi both rental houses up to about 80% of appraised value. Get 30 yr Fixed Rate loans, about 5% to 5.5% (the premium for Non-owner occupied is about 1/4 to 1/2%). The goal is to get as much inexpensive capital locked in at cheap interet for as long as you can (30 yrs).
Use the cash-out equity (plus some of your savings if needed, to make DP's on the rentals that you want to buy.
And I would want to get rid of the $50,000 'banker's mutual fund' - invest with a no-load broker. A bank is not a very safe place for a mutual fund - the fees, commissons, and taxable events will probably consume most of your return. And it is probably poorly allocated?
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Fri Jun 24, 2011 3:42 pm |
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RandRmoney
Contributing Member
Cash: $ 7.65
Posts: 33
Joined: 03 Mar 2011
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| I knew I could count on you. |
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I definitely thought about refinancing the properties but the problem is the house values in the areas have dropped so much that I wont be able to get any cash out.
I would have to put a little money into each of them to get the maximum value and then pay for the appraisals.
Good idea though because I would need 20 - 25% down on my next property.
And I know you would drill me over the mutual fund move. I plan to switch soon to a major investment firm but that dividend check I have been getting for the past two months made me feel good. As soon as I get another income producing property I will switch.
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Sat Jun 25, 2011 2:11 am |
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littleroc02us
Moderator
Cash: $ 384.35
Posts: 1891
Joined: 09 Feb 2009
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Why not pay off the 55k loan with the 60k you have in the bank? That would increase your disposable cash flow each month by well over $400, plus your risk level would lessen more so then carrying 2 mortgages and worrying about having tenants who pay on time or move out and the property is vacant.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Mon Jun 27, 2011 9:08 pm |
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