Advice for a Newbie

[Timothy Newsome]

I am currently in the Process of renovating my primary home. Ill be adding 250 sqft of space on top of updating everything and possibly adding another bathroom. Houses in my development have sold as high as 585k, my house was appraised for 475k as is. I took out a Heloc I owe 230k on the house and I plan on spending 100k updating making my total in 330k. Im trying to force the appreciation to do a cashout refi and pay of the entire loan and pull out possibly 100k. Should I live in this house after and buy more property with the 100k or rent it out move and try to buy more property, the only problem is my area is so expensive a new mortgage would be more then what im paying now. Would love any and all advice. Thank you for your time and knowledge.

[Jaron Walling]

@Timothy Newsome That's great. It's time to run the numbers to determine the cash-flow.

Define your minimum cash-flow to hold this property. 

Make sure to factor in insurance (slight change as rental), property tax (in our market is 2x a primary res), vacancy (3-5% in most markets), capex (old roof?), maintenance (5%), and PM (10-12%) if you choose to not self manage. 

This calculation should tell you what makes the most sense. Follow your numbers not emotion. Cheers.