All Forum Posts by: Mike Landry

Good lord.....does anyone else find this amusing.  

@Account Closed

Brent, it is great that it changed how you look at and value you hard earned $$$.  That is awesome.  But the truth is you don't need this scheme to change how you look at and value $$$.  

Even if you had a HELOC for $100,000 or 1,000,000 it does not benefit you any more. Your limiting factor is the amount of INCOME you can do this with and for HOW LONG you can do it. So if you made $10,000 a month your maximum benefit is $25 per month. If you make $5,000 per month your maximum benefit is $12.50 per month. And if you can't go 29 days without tapping the Heloc the numbers decrease even more. Those credit card points are looking like more of a bonus...

Use a HELOC to buy more property. Don't use a HELOC to do this!

Now that we have that settled and all agree transferring debt does not change anything for the better I want to propose HOW to ACTUALLY MAKE this SCHEME work.  Yeah call me crazy.  

I'm going to make some assumptions:

Normal Person A

take home pay of $10,000 per month, gets paid on the 1st

spends $10,000 per month, pays everything on the last day of the month

pays loan off the standard way over 30 years, 150,000 3% 30years

Scheme Person B

same as above but now he decides to take out a HELOC @ 3%.

When he gets paid, he immediately puts the 10,000 into his mortgage and therefore has 0 Cash in the bank (but has $10,000 less on his mortgage).

On the last day of the month he withdraws from the HELOC 10,000 to pay his bills.

When he gets paid on the 1st of the next month he pays the HELOC off to 0.

He continues this until the mortgage is paid off.

Doing this he will pretty much always have a $10,000 less debt balance then Person A (except for 1 day a month).

Which would save $300 per year interest or $25 per month.

This would pay the loan off about 21 months earlier and save about $5,000 in interest over the LIFE of the loan.  

In this IDEAL situation the savings is minimal.  Not to mention way to complicated to realistically execute.  

It works because you are not transferring debt, you are transferring your earned cash for 29 days at a time.

MYTH BUSTED

Why?  Multifamily housing isn't the easiest to come by around here.  Whats wrong with Orlando?

@david

Palm meet head.. Ugh

Can you summarise in one sentence what you are trying to tell us?

You kerp saying it didn't matter where the money comes from. Ok, CASH. I agree as long as it's not borrowed. but when you BORROW from anything that accrues interest there is no benefit. 

Correct: No one's arguing about accelerating your mortgage. We all agree it can be done and saves interest over the life of the loan.  Why do you need a heloc? You don't. Just pay extra if you want. If you do use a heloc,  you are directly negating any benefit. 

@Roy Oliphant Why will there be less work? I don't subscribe to the doom and gloom.  Just like realestate, everything is cyclical....stock market, job sectors.  As boomers retire their jobs will be replaced.  Sure some job industries will disapear but new industries will emerge.  How many tech/it jobs where around 20 years ago compared to now?  Airlines are forecasting growth in the next 10 years that will exceed their capability to keep up with employment.  Health care can barely keep up now.  I agree a generic college degree doesn't get you what it used to.  But specialized degrees and skilled training still provide great career opportunities.  Cheaper, smaller, efficient, close houses???? sounds like you agree about people living in the suburbs. Mcmansions will continue to be a luxury of the top %.  And the downtown gentrified trendy areas will continue to be a temporary stop over in the lifestyle of the millenials.  

This is brutal. @David Dachtera you are losing credability here.  @Chris May and @Eric Jones have been professional and kind trying to explain this to you. I'm not sure where you are getting hung up. Bottom line is 3% interest on $XXX is the same weather its in a HELOC or a 30 yr fixed. The only way this COULD work would be using a credit card that did not accumulate interest for a grace period...30 days or so and paid it off monthly. HELOCs acrue interest the day you use them. I also think you have a misunderstanding of amortization when you question why you pay so much interest initially. You are paying the interest on the remaining balance at the time. On 150,000 you pay 1 months interest on 150,000. When its paid down to say 100,000, you will pay interest on 100,000. The principle payment will always be what your original monthly payment was minus the current months accumulated interest....

You are very stuck on this working. It doesn't. You won't even try to understand it.   

Being one of the oldest millennial(1981) id like to put forth my opinion.  @Scott Trench I think you have a case of confirmation bias....as I may too.  I live in a  very nice midlle upper clas suburb of houston.  Educated, high earners, young parents averaging 3 kids per household.  Jobs consisting of oil mangement, engeneering, computer it, pilots, small business owners.  The average age might put them just outside of millenial teritory but there are a lot of millenials.  The key here is kids.  We are educated and value the quality of top of the line public schools.  When you look at the cost of living downtown in the trendy areas and paying for private school for multiple kids, it makes no sense.  The only ones I know living in the gentrified areas don't have kids, are single, or will leave when they do settle down.  Furthermore I believe the necessity to work in crowded downtown areas is only going to decrease as we become more mobile as a society.  

I get it, its fun to live downtown, eat at the best restaurant, drink craft beer, walk everywhere.  Thats great before you procreate....which millenials are delaying.  But when they do decide to settle down they will be heading to nice quiet suburbs with good schools and ammenities. 

Hey guys I had a question about how you would handle this.  Basically.....one of my rental properties needs a new roof due to wind damage.  The roofing company said it has "extreme" wind damage and basically said insurance wouldn't be an obstacle.  Well the insurance adjuster came out today and said that it just needs repairs in the area of $600.  

The roof is 10 years old, asphalt shingles.  Missing between 10-15 shingles scattered about.  Several more bent and damaged.  Small leak near flashing where some shingles are damaged.  

The adjuster said if I wanted he would remove the claim from my record so it doesn't show up if I wanted to pay repairs out of pocket.  He also casually mentioned he'd meet with the roofer.

I can see both sides interest but I tend to agree with the roofer. 20 year exp, has done work for my family before.

The roofer suggested getting a different adjuster to meet him out there.  Any tips with dealing with insurance companies.  This is my first claim ever for a house.

Thanks

Mike