All Forum Posts by: Jim Macedon

There are several banks that claim on their website that HELOCs and second mortgages on investment properties are not allowed by Texas law.  Are you saying that's not true?

The state of Texas does not allow HELOCs or second mortgages on investment properties at all.  Which is surprising and disappointing for a state that is generally business friendly.

Seems like more often than not the big developers are getting government assistance for their projects.

Do commercial general contractor charge less than residential home builders.  And if so, how big do you think the project needs to be to draw their interest?

Let's say the HELOC interest rate is 1%. So if I pass my money through the HELOC to the mortgage, I'm paying 1% on my extra mortgage payments. If I just pay that exact same amount to the mortgage, I'm paying 0% on it.

At least that's what makes sense to me.  Maybe I'm missing something.

That's pretty much what I was thinking.

Could someone explain depreciation recapture to me?

Here's the specific scenario I'm thinking about.  You have a rental property for several years.  You are obviously claiming depreciation during that time.  You decide to stop renting out the property and move in.  It becomes your primary residence for two years or longer.  You sell the property.  What are all the tax implications?

Just intuitively, it's hard to fathom how this could be beneficial, but my intuition has been wrong before. If I have the extra money to pay the payment on the HELOC, why wouldn't I just use that extra money to pay down the mortgage? I pay nothing on the money if I send it directly to the mortgage, and I pay 10% or whatever if I send it to the mortgage via the HELOC. I don't see how that's a good idea.

Well, it's not in downtown Austin.  It's a suburb.  Problem seems to be that the construction costs are the same as Austin, but the sales market is not.  I was attracted by the cheap land and availability of multifamily lots.  Looking for a diamond in the rough I guess.  But it looks like the obvious places to build are obvious for a reason.

You're 100% right.  I'm currently in the process of building a 4plex that I'm holding.  I was looking for a to sell project, and decided on this.  It was out of pure ignorance and naivete.  I thought I could do phases where I just built one building for like $800,000, sell the units, rinse and repeat.  I didn't realize the huge upfront expenses that pretty much defeat the whole purpose of doing phases.

I already nixed the project and terminated the contract for the land.  I'm going to take a step back and make sure my current project goes well, and then maybe look at doing a slightly larger building, maybe 8 units or something.  Or I may go back to looking at existing multifamily.  I'm frustrated that I haven't been able to get a better deal on construction when I see so many people saying it should be $100/sq ft or less.  Where should I be looking?  Commercial contractors?  My focus up to now has been on custom home builders because my projects were only 2 and 4 unit.