All Forum Posts by: Frankie Woods

Why is your 401k company asking for a signed contract?  You can use the money for whatever you want...  Unless you are using the first time homebuyer portion?  Why don't you just get a general purpose loan?

 I sent a PM too!

Also, remember that Chase has the most restrictive rules with the 5/24 rule.  Typically, you want to max out those lines of credit cards before moving to something else.

Chase Sapphire Reserve and AMEX Platinum cards are arguably the best travel premium cards on the market.   To answer this question, however, you really have to focus on your goals (e.g., where do you want to go, where do you want to stay, etc.).  Each rewards programs have sweet spots depending on where / what you are trying to do.

I think you either have to save or borrow money from friends or family. If you have a government background, PENFED offers HELOCs on rentals up to 80% LTV. But you can own no more than 3 properties.

Borrow from family, use credit cards, sell some assets, save.  No secrets here.

Your analysis looks good to me (except the PM...mine averages about 12%).  I see this as a great opportunity for you.  Simply being able to live for free, allowing you to purchase a 2nd home down the road makes this a good deal.  I would run with it.

I wish I would have taken HELOCs out on my primaries before turning them into rental properties :(.  Lost the opportunity on six.  

I also like the "pay your mortgage" philosphy while relying on a HELOC to make purchases. The only risk is if your home drops in value and you are not able to take as much out as you thought. But there is generally risk in any investment other than traditional checking / savings / CD accounts.

I also bought my first property at the height of the market, and it has since returned to that price; though, I would still lose money in closing costs if I sold today.  However, it is nice seeing the debt paydown over the years.  Even though the paper loss hurt, I continued to buy during the downturn and have been rewarded quite nicely.  Hindsight being what it is, I wish I would have bought more.  

As @Russell Brazil stated, you seem to be looking at risk mitigation in the right way.  The key points is don't become over-leveraged (there is quite a debate on what this actually means, but most would say having at least 20-25% equity among your properties) and have solid reserves (again the debate rages on here as well but generally 6 - 12 months worth of expenses is the norm).  The people who got burned were forced to sell during the last recession.  Over-leveraging is more of a problem if you don't have the income or reserves to cover the debt service.  Most traditional lenders won't call a loan as long as you continue to make payments, even if the property drops so much in value that you become upside-down on the loan (i.e., you owe more than your house is worth).  Personally, I focus on having sufficient reserves available to get me thru a soft patch.  As we saw during the GFC, this could be years.