Buying House #2

8 Replies

Here's the situation:

In December 2014, I purchased a duplex. My wife and I occupy one half, rent out the other. To purchase this house, I was able to take out an FHA loan and then borrow a little from my IRA (which was paid back). Since then, everything has gone great but my savings hasn't grown as quickly as I'd hoped (apparently weddings cost money).

That being said, I have about $20K in equity built into the house right now. Knowing I cannot dip into savings or another FHA to make a second deal, what are my best options going forward? Right now I'm thinking a Home Equity Loan is best bet (my credit is outstanding, thanks responsible me), as I have no network of investors to pull from.

For more reference, I purchased my house for around $200K and there is a condo down the street selling for $100K. I would love to get my hands on it and think a HEL would be perfect for me. 

Thoughts? What are some things to consider as I pursue this?

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Yeah @Cosmo Iannopollo I couldnt find it..... if your rental is 1200 a month and mortgage is 1650 so you only pay 450 a month right not 800?

okay so thats really good because if you rent out your side for another 1200 then you got 2400 and only 1650 so thats about 700 extra assuming you've got expenses/management/saving for vacancy and everything (500) then you got 200 a month cashflow then you are really in a good position....I would then use a home equity loan and get that condo for 100k BUTTTTT if i were you i wouldn't get a condo (monthly payments EAT you especially when you are trying to build up properties because theres always that burden but thats just from my experiences) i would try to maybe find another duplex and do the same thing ....not to mention that 200 cash flow you are getting could contribute to your payment so you basically have a duplex paying itself and another duplex your living in for only 200 a month...

@Bishoy Girgis yeah, right now I'm paying $450/mo to house myself. Not bad, right? Haha

My ultimate goal is to move soon and rent the other space out for that extra $1200. I wondered about that HOA and monthly expenses, but the upside to the condo is the asking price right now. Where I live in CT, not much affordable. But this condo is on my current street, so I know what it can command in rent, which is probably 1,000-1,200 as it is a 2BD/1.5 bath.

@Cosmo Iannopollo Definitely a good deal. 

Yeah i think what you need to figure out is your cashflow once you rent out the other space for 1200.

I know that the condo is price is whats luring you in so much but theres some big points you got to look at like how much is it expected to increase (i find condos don't appreciate as much and "condos" have less customers then conventional homes)

Of course i dont know you area and it may be a good chance but if i were from the outside giving you advice, id say try to find a better deal on a SFH or duplex or so.....BUT also another important point to mention would be with the condo, if the condos price is actually a lot more ie 120/130k maybe get it, rent it out for a year (could take care of you living for even less lol) AND will make you some money if you sell it in a year and then take that money as well as money you try and save and then you could get another property thats better for you in the long run.