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Here's my situation....what would you do?

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Money Talk > Personal Finance

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Contributing Member

Cash: $ 7.65

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Joined: 03 Mar 2011

Here's my situation....what would you do?  Reply with quote  

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?
Post Fri Jun 24, 2011 3:08 pm
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Cash: $ 751.85

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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?
Post Fri Jun 24, 2011 3:42 pm
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Contributing Member

Cash: $ 7.65

Posts: 33
Joined: 03 Mar 2011

I knew I could count on you.  Reply with quote  

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.
Post Sat Jun 25, 2011 2:11 am
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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)
Post Mon Jun 27, 2011 9:08 pm
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