Author Topic: Buying a second house  (Read 1090 times)

sj16

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Buying a second house
« on: June 18, 2015, 12:50:42 PM »
Our current condo's valued at about 550K with 180K mortgage left. It is less than 1000sq ft. We currently have one year old baby but we're thinking to expanding the family. It would be possible but highly unpreferrable to have 2 babies in our current place..so we are looking to move to a bigger place. Now the problems..
1. We have to hold our condo until 2020 to get the full market value as it is a controlled price unit and there's a very high probability of it going up even more in value. Easily rentable.
2. Don't have too much cash on hand for a downpayment on a bigger place whose rice range would be around 600-700K for a decent 3 bdrm SFH or even a townhome.

We have a good amount in our equity ~300K..can we do anything with this to help us build our wealth/real estate portfolio?
Any thoughts on if it makes sense or too risky to use some of our home equity as a down payment and purchase a bigger place and rent out our condo?

Any advise would be appreciated. Thank you!

Bearded Man

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Re: Buying a second house
« Reply #1 on: June 18, 2015, 12:59:42 PM »
You'd have to look at what the rent would be compared to a new mortgage payment to see if it's worth it, but you could do a cash out refinance to pull 80ish% of your equity out to invest, but if doing so makes your mortgage payment 3K and you can only get 2K for rent then it's not worth it. If you can rent it for 4K and the mortgage payment would be 3K then it would be worth it to do so. Some lenders in the US have zero lender fees for primary residences. I wish I would have bought my second and third houses that way. I am on the fourth one which is under contract now. Good luck.

Mother Fussbudget

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Re: Buying a second house
« Reply #2 on: June 19, 2015, 03:31:15 PM »
Have you thought about taking a loan out against your 401K account? 
Payments to that would go BACK into your 401K account + interest. 
All payments and interest would go to YOU. 

It's a way to get at your 401K equity without penalty - and is a way I'm considering buying a performing mortgage note (instead of buying a rental property).