current situation with my 2 Bedroom, 1.5 bathroom Townhouse

General Real Estate Investing
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current situation with my 2 Bedroom, 1.5 bathroom Townhouse

Manuel Llanas
Member since 2024 · 27 posts · 12 votes

It has been a while, since i've done this. But, i'm currently living in my first home (townhouse). I'm working on the flooring, replacing it with vinyl planks, in the living room. The mortgage is at $972 and some change. With an APR 3.25%. Purchased at $175,000 and it is now down to $155,000. Supposedly, this place is worth around $250,000. I could pull money out from it, but as most will know. This interest rate is AMAZING. So, I'm hesitant on doing anything with it and just saving up my personal income to do small upgrades as best as I can do. Which is a very slow process for me. The location of this place is in an amazing spot in my small hometown. School, clinic, hospital, grocery stores, gas stations. All within walking distance. My goal is to try to fix it up and set it up for renting to travel nurses. But also trying to save up to get a multiplex at my home location. I've been living here for about 5 years now. I do have my VA benefits that I could use. Based on all this information. What would YOU do?

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    1y

    Wiat until rates go down later this year. Then use your VA and get a duplex or Triplex....

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  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    1y

    Personally, I'm not a wait on the sidelines type of person, so maybe what I would do does fit everybody. But here goes, I would not wait, I just bought 3 brand new houses and got 4.75% fixed for 30 years and 4.25% fixed for 10 years then variable for thenext 20 years. And these were on investor, non-owner occupied mortgages. If I was in your shoes I would buy a place, single familt, 2,3, or 4 untis, and occupy one and use my VA 100% financed zero down entitlement. BTW, thanks for your service. After doing that and moving to the new place, and renting out the old place I would get a second mortgage or HELOC on the old place and get about $45,000 in cash and maybe buy another place. And keeping the existing 3.25% mortgage on the old place. IMHO, I think its a great time to buy, besides the 3 new construction, I also bought 2 other properties and have an offer on a sixth property right now, crossing my fingers. One of the resons that I say don't wait is that while others sit on the sidelines that means less competition from other buyers and when interest rates do decline two other things will happen: 1. more buyers will come out of the woodwork increasing buyer competition AND 2. Prices will rise as demand exceeds supply and you will have to pay more. I'm always a buyer, but I still believe that now is a buying opportunity and I am putting my money where my mouth is.

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  • Manuel Llanas
    OP
    Member since 2024 · 27 posts · 12 votes
    1y

    UPDATE: i'm currently at $152,000 on my mortgage now. The Mortgage is now at $982 per month. The current market in my neighborhood, cheapest property for sale is at $299,000. that particular property needs about 25-30k of upgrades. My townhouse is in the process of getting upgrades, which is around $13,500 +/-. I believe that the value of my townhouse may have gone up to the $300k mark, once it is fully updated. I'm still up in the air on selling it, i could furnish the place and set it up for a Travel Nurse property for Midterm rentals. The hospital is literally within walking distance (5-7 Minutes, give or take). I'm under the assumption that it could be rented for $2,200 for rent, if i fully furnish the property. If I sell the property, I free up my VA benefits and can focus on a triplex that I had found. giving me the opportunity to purchase it with $0 down and pay the closing cost. With the triplex, i could live in 1 unit and my brother and his family live in the other. Both of us can cover the cost of the triplex, per month. IF, I sell the townhouse. Otherwise, I would have to wait a couple years of renting the property out. If I rent the property out, I will need to have a property manager take care of the townhouse. Since i'll be moving out of California and wont be able to come back here often.

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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    1y

    Your interest rate is NOT something to be obsessing about!

    If you sell and buy the 3-plex with a higher interest rate, but make more money, what does it matter?

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  • Manuel Llanas
    OP
    Member since 2024 · 27 posts · 12 votes
    1y

    Yes, but how long will it take to get back to making 2.2k in rent. The profit from that rent to travel nurses is 1.2k. It will also lead to me being able to pull out a HELOC to get the triplex later down the road. Just not the one i'm currently looking at. Both paths lead to the same output, but one is at a later time frame compared to the other and will have debt along that path. But it will be debt that should last about 4.5 years. While the other, will clear debt immediately. But wont have the long term profit of that rental. I'm not entirely sure how long it would take to get the triplex to be on the same profit margin as the townhouse would. I did the math on the triplex and would end up with around 400-500 per month in profit. This is including cash reserves for repairs.

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