Rental Property Investor · Minneapolis, MN · Member since 2019 · 42 posts · 13 votes
New to this community, looking forward to connect with ppl in MN or TX!
Question: bought my house in the cities for 280k, Zestimate shows 350k after four years, 15yr mortgage has 200k balance with 3% APR and high but manageable monthly payments. what do you suggest:
1. Do nothing, pay off mortgage in 11yrs
2. Refi (30yr sub 4% APR available), if so, what to do with the money next?
3. Sell and reinvest, in a bigger house to appreciate or rental properties.
Currently very busy with a great job and good salary. Never done REI but willing to learn gradually.
I appreciate detailed answers as I’m new to the terminology.
Layton, UT · Member since 2019 · 85 posts · 49 votes
6y
Either refinance to get some extra money or get a HELOC (what I'm doing), which is practically the same thing but with more flexibility. Then start investing with your favorite real estate investment method. I'm going to do BRRRR because I want to build a large portfolio of cash flowing rentals as quickly as possible and recycle the same capital over and over.
Rental Property Investor · Minneapolis, MN · Member since 2019 · 42 posts · 13 votes
6y
@Brendan F. Nagle thanks for the answer. I'm with you on the first part. And with the second part too, as the answers seem to converge to HELOC.
Part of the challenge for me is to learn about areas with 1% or more rent. Some of the responses say it doesn't have to be 1% to generate cash flow. My calculation says (with reasonable assumption on current mortgage rates, maintenance, etc) that expenses come to about 0.6%, and a rent of 0.8% makes it even, again considering reasonable vacant time and PM cost. So yes, it doesn't have to be 1% if you don't pay PM, are innovative in financing, etc. But for a beginner, 1% rule is not a bad criterion. Where/how to find the deals with this criterion is the question. I'm not familiar with rural areas; how reliably can you count on renting your properties there? How is appreciation, etc?