Buying advise for a house in LA county/Lancaster/Palmdale/AV

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Buying advise for a house in LA county/Lancaster/Palmdale/AV

Ivan Sing
Member since 2019 · 2 posts · 1 vote

Hi all, I am new on here and Please need some advice - I currently own an investment house (purchased as a Second Home) in Lancaster CA which I purchased in 2016. I have an equity of about 150k in my house which I would like to access. I was previously living in the Bay Area which is why I bought the house in Lancaster CA as a second home. I would like to buy now a Primary residence in Lancaster since I got a job in LA County. I might again rent this house down the road if I find the job again in Bay Area. My Question is 

Q - How should I buy this house? Should I tap into my equity in the house in Lancaster and get HELOC or should I pay the downpayment for a house as cash? (I do have 66k saved up for a property for 330k house).

I want to tap into the equity because during recession AV was hit very hard. I am worried about another recession being around the corner since house prices have inflated again, and if the recession does hit the equity in the house will be gone. I can always save cash and invest it down the road for cash purchase for a condo/apartment down the road.

Please suggest!

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  • Andrew Barajas
    Palmdale, CA · Member since 2017 · 9 posts · 1 vote
    6y

    @Ivan Sing Hi Ivan, have you gotten any feed back on your situation? I do feel that a recession is near and putting that equity to work now might be best. I'm new to REI and looking to meet with other investors in the area. Maybe we could work together!

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  • Grey Stone
    Investor · Palmdale · Member since 2016 · 112 posts · 80 votes
    6y

    It really depends what your goals are. Also, there's a few things I'm not really sure about. Do you have $66k specifically saved as a 20% down payment for a $330k home? This may be an issue because you will need to show the bank reserves and may need to cover closing costs and moving costs. Are you already preapproved for that amount? I always think it is most important to get preapproved and have a lender with your info ready to go, in case you find a deal and need to move quickly. And what is your current mortgage and rent? The AV was definitely hit HARD the last recession, but most recessions are not that bad. There is also strong demand, as many people are priced out of Los Angeles. If you pull money out of your home, do you feel confident it will cash flow, or at least carry itself if rents fall 20%? Rents sometimes rise during recessions, but I try to plan for the worst. Personally, I am choosing to keep enough equity in my properties so if I need to sell I won't feel trapped or need to write a check. However, if I came across an amazing deal that I could not afford, then I would absolutely pull money out. Fortunately, I'm making decent money to where we are able to buy rentals at a pace that feels good for me and the goals for my family. So, in a nutshell if your new mortgage will make your rental CF negative or too tight if we see a dip in rents, do not get a heloc. But if you get the heloc and it still CF well, I would get the heloc. Also, if you think prices will dip, it would be best to make your credit pristine and stack cash. Lending tightens during recessions, but banks always lend. 

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  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    6y

    I always vote to skip primary homes altogether and just keep buying investment properties. Here's why-

    https://www.biggerpockets.com/...

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