Investor · Nashville, TN · Member since 2015 · 429 posts · 143 votes
hey all, so I've been house hacking a duplex since 2016 and it's finally time to sell. after the loan payoff, commissions etc, I should clear 170k. it won't be taxed according to my cpa.
I'm going to buy a SFR for myself (I know, I know, I should do a HELOC on the duplex and use that...I'm just ready to enjoy my life and do something nice for myself haha)
is it better to keep as much cash on hand as possible, or invest as much into the property as possible?
initially I was thinking about putting 100k down and putting the rest in savings, but my agent was saying it's not a bad idea to put a smaller amount down and have cash to invest elsewhere
just wondering what other people like to do?
(I also have a 4plex that I'll keep renting out)
ps, I got into investing and house hacking in 2015 thanks to the BP podcasts, forums etc. it's been full circle.
@Mark Douglas remember, whatever you put into your personal property is going to get you exactly 0% return on investment. Hopefully that will give you some clarity on your decision.
@Mark Douglas remember, whatever you put into your personal property is going to get you exactly 0% return on investment. Hopefully that will give you some clarity on your decision.
The return on investment for putting more down would just be equal to the interest rate of the loan. Let's say it is 7%. So it would be like investing your money at 7% with very little risk. We'd have to consider what other investments he could put his money into which would earn north of 7%. Factoring potentially higher risk, he would have to invest his money and get north of 10% ROI to make these two paths equal. I did 0 actual math on this, but my gut tells me that I'd need to earn an extra 3% to take on any additional risk in an investment.
@Mark Douglas if you have the time, resources, capital, and patience for value add real estate investing that will be the best return on your money in the REI space. If you're not confident that you could do this, then perhaps putting more down might actually not be a terrible idea considering the current interest rate environment. I discussed this recently with the legendary J Scott when we were on a coaching call, and he himself advised me to throw my extra cash at my mortgage right now due to where the rate is at, and I mostly agree...but mostly because I've been doing most deals recently with 0 out of my own pocket.