All Forum Posts by: Val Williams

 Thank you for your reply :). To be clear, the $2600 includes taxes and insurance. We'd be very local so wouldn't be hiring someone for property management. But repairs and capital expenditures are definitely along the list of my concerns.

I guess with the market the way it has been, the idea of holding onto a home for the purpose of appreciation in the long run and having had someone else pay off your mortgage isn't smart at this point?

I really appreciate the reply. Based on the numbers I gave, what makes it seem like there's no way there would be a positive cash flow? And the idea of it being a money pit, I guess since I said it's an older home?

Just trying to fully understand :)

I'm very loosely estimating based on the town I'm in and the number of bedrooms. If we got more like $2500 (which is entirely possible) plus the garage rental (let's say between $200 and $600) that would total $2700-3100 per month with a $2600 mortgage. So I guess technically a positive cash flow. But not sure that's a significant enough cash flow (since I'm assuming repairs to offset it over the years) to make renting it out vs just staying here make sense?

Interesting about the prediction that we're reaching the peak of the Bergen County market. That's unfortunate for us... since we bought 2.5 years ago and doesn't really seem like our home value increasing is in the cards haha. If home values are going to come down, maybe it would make sense to wait to buy anyway? Or are interest rates anticipated to continue to increase and offset this making there be no benefit in waiting?

Hi all,

Hoping to talk this through with people knowledgeable in this area.

I own a 3 bedroom 1.5 bath home in Bergen County. With taxes, mortgage, and insurance my monthly payment is around $2600/month.

My husband and I have been toying with the idea of renting out our current home and using the rental income to offset our mortgage qualification in the debt/income calculation to buy another home. We've already talked this through with a mortgage broker and would qualify for the price point we had in mind.

 I believe we'd get at least $2300 if we were to rent it out. Possibly more like $2500, but I'd rather estimate low for these purposes. We also have a 3 car garage in our backyard and currently rent out 2 of the 3 bays (keeping 1 for personal use) for 200 each. So have $400/month that would be coming in on top of that, and potentially another $200 if we successfully rented out the 3rd bay. But the garage isn't entirely consistent so I wouldn't count on all of the bays being filled at all times.

Like much of Bergen County, the house is an older home that will inevitably have repairs come up.

If we do this, it won't be for the purpose of having a positive cash flow every month, since I know that isn't realistic. But is this a decent idea or is it silly to consider? We would be using a VA loan, so if we were to buy a 2nd home we'd need to live in it. So buying an investment property in a different location isn't an option. Most likely we'll either just stay in our home and continue on as we are, or move forward with this plan where we rent it out and move to a new home.

Looking more for whether this is a smart idea for the long term. And any factors I'm inevitably not thinking of that I should consider.

Thank you!

Bump

Absolutely. The numbers I provided are from lose estimates I got from contractors through email, but I of course would get actual estimates should I'd truly consider moving forward. 

However, if it's a terrible idea to take that kind of money out of savings, then I wouldn't bother wasting anyone's time since I know that I don't want to take that large of a loan. 

I'm 26 years old and my husband is 28. We currently have about $75k in savings. 

We own a 3 bedroom home in northern NJ that we took around a 385k mortgage for. 

I'm fantasizing about the idea of a renovation to our home. This hypothetical renovation would add a den to our first floor, and upstairs would add 1 bedroom (making it a 4 bedroom home), and enlarge one bedroom (creating more of an obvious "master" bedroom).

 This renovation would probably cost about 70-80k. 

Our mortgage is already pretty big for us, and I wouldn't be comfortable taking all of that out in a loan. 

So my question. How much should we have in savings? Would it be a bad idea to do something like spend 35-40k from our savings and take a loan for the other 35-40k?

Also, I know that this renovation would increase the value of our home, but I'm not sure how much relative to the cost of the renovation.

Any thoughts on this, pros and cons, are greatly appreciated. Thank you.