All Forum Posts by: Christian Scully

@Paul Sandhu this is brilliant. I think I hear a ghost moving in to our Airbnb as we speak.

I'm a bit confused on this topic and am happy to see so many people all for paying them off and enjoying the rewards of fewer rentals. On the podcast and many places people are always saying leverage leverage leverage. But where I am duplexes in C neighborhoods start at 200k. So over 30 years you might pay $200k+ in interest. If you have 5 houses leveraged, that's $1,000,000. If I pay them off in half the time and save $500,000 in interest isn't that the same as making $500,000 on another property or two? Plus if they are paid off they are cash flowing $2400-3000/month as opposed to a couple hundred a door. I understand that having more houses long term will earn you more equity, but there must be a specific number of houses you have to reach in order for it to pay off, relative to the housing prices in your market, compared with the interest savings and increased cash flow. Am I looking at this wrong?

@John D. good to know, I was unaware of that. I was just working through the numbers. hmmm. back to the drawing board. I will ask the local lenders about that also. 

Running more numbers it seems like with current interest rates and our PMI rate of .87%, it actually might make more sense to not refinance and stay in our current mortgage. I could then get a fixed rate home equity loan to cover the rehab loan and CCs at somewhere between 4-5% for 10 years for a manageable payment that we could pay extra on over time. Then open a HELOC for the remaining available to have at hand if we find an opportunity. This would decrease our current monthly payments by around $800 and provide the equity line if we need it. I had not considered that paying PMI might actually be cheaper over 30 years than paying an extra 1.5% interest rate. At some point over the next decade we will be able to start paying extra payments anyways and can reduce our PMI expense that way for a best case scenario.

@Anthony Thompson Thanks Anthony, that's helpful. And I'm glad to know this isn't a simple dilemma, my brain is maxed out! 

I think it is ridiculous that you can't get rid of PMI on FHA loans. Otherwise I would definitely stay in the current mortgage and get a good HEL or HELOC to lower the rates I'm paying on the rehab loan and CCs.

@Nelson Taylor A mix of Airbnb and VRBO in the West End.

@Anthony Thompson I appreciate your input. We certainly took a shot and got overextended because of the contractor issue that set us back $20k. We've been able to weather the storm with our current full time income and the rent from our 1st floor unit. Now that we will be adding income from the 3rd floor unit it will be even better. Would you recommend refinancing to remove the PMI and getting the rest of the funding from a HELOC? Or staying in our current mortgage and getting all the funding from a HELOC? Or a HEL at a lower rate?

@Nelson Taylor We run our first floor unit as a STR and averaged $2,800/month. It was an experiment that worked well for us. We will be trying to do the same on our new unit and expect to be somewhere around $2,000/month. If we rented the units out to a regular tenant I would expect something like $1350, $1350 and $1000.

@Harjeet Bhatti thanks for your advice. My credit score will likely be around 650-670 in the next few weeks when I want to take action on this. Do you also feel strongly about sticking with a 30 year fixed as opposed to a 10/1 ARM? One option is refinancing the 202k to the 10/1 ARM at 4.125% with no pmi and not cashing out. Then opening a LOC for $100k at 3.49% for the first year then prime+1.25.

If anyone from Rhode Island has input and experience with local lenders that would be great too. I'm not sure if I'm missing something or should be looking elsewhere for lending.  

@Jason D. thanks for the response. Our plan is to hold this property indefinitely as part of a retirement plan. That's a noted point about the rates.

We do occupy one of the units currently. I haven't been able to find 80% for a multifamily property, though they will do it for a single. I am wondering if they will do it if I don't cash out and use the rest of the equity in a LOC.

I'm trying to figure out the best combination of refinanced mortgage and HELOC or HEL to accomplish these goals.