Author Topic: What do I do with 350k in equity?  (Read 882 times)

CCT33

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What do I do with 350k in equity?
« on: April 05, 2019, 07:24:13 PM »
Hi,
First off, I'm very very new to all things investing, so forgive me in advance.

Long story short : I bought a house in seattle right before the market took off and it's currently worth ~600k. I paid $280k and owe about $250k still. It's my primary / only residence

I have no debt other than the house and a very small car payment

Everyone keeps telling me i'm "sitting on a ton of money" but what do I do with it? Invest in more real estate? something else? nothing?


waltworks

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Re: What do I do with 350k in equity?
« Reply #1 on: April 05, 2019, 10:34:50 PM »
If you live in the house and you like living there, the answer is: ignore it, and continue with your life.

If this is an investment property/rental, you may (or may not) want to sell it.

If you live in the house but hate living in Seattle, sell it and move.

Pretty easy.

-W

SwordGuy

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Re: What do I do with 350k in equity?
« Reply #2 on: April 06, 2019, 11:05:44 AM »

Everyone keeps telling me i'm "sitting on a ton of money"

I'll bet that 99.9% of the people telling you that mean you should get an HELOC and spend! Spend! and Spend!

That's terrible financial advice, of course.

I invest in real estate and think it's a great way for middle class folks to build wealth.  I have a HELOC that I *can* use to purchase a property if my cash reserves are down at the moment.   Have used it once in that manner.    Just make sure you have fallback plans in case things go wrong -- like it won't rent or you lose your job, so don't use it to build a house of cards.

ender

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Re: What do I do with 350k in equity?
« Reply #3 on: April 06, 2019, 11:11:12 AM »
A lot of the answer to this depends on your overall net worth, income, and asset breakdown.

Telecaster

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Re: What do I do with 350k in equity?
« Reply #4 on: April 06, 2019, 01:51:14 PM »
Hi,
First off, I'm very very new to all things investing, so forgive me in advance.

Long story short : I bought a house in seattle right before the market took off and it's currently worth ~600k. I paid $280k and owe about $250k still. It's my primary / only residence

I have no debt other than the house and a very small car payment

Everyone keeps telling me i'm "sitting on a ton of money" but what do I do with it? Invest in more real estate? something else? nothing?

I'm kind of in the same boat, only I bought longer ago (guessing based on the price) and so have more equity.  If I pulled the pin and sold the house I could FIRE, but then I couldn't live in Seattle, which is where I want to live.   The wife and I have decided to give it another year and see where we are. 

Freedomin5

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Re: What do I do with 350k in equity?
« Reply #5 on: April 06, 2019, 04:15:55 PM »
I have a HELOC that I *can* use to purchase a property if my cash reserves are down at the moment.   Have used it once in that manner.    Just make sure you have fallback plans in case things go wrong -- like it won't rent or you lose your job, so don't use it to build a house of cards.

^This. You theoretically can take out a loan against your house to purchase investments or buy another rental property, but you must make sure that you can cover the payments of both your mortgage and the new loan with your current income, and you need to be reasonably sure that your income is stable. If this house is your primary residence, you run the risk of losing your investment property AND your home if you plan to use only rent from the new place to cover repayments of your HELOC. That puts you in a very risky situation.

How we have used a HELOC is to use a HELOC on a paid-off investment property (paid off from renting it out for several years) to purchase another investment property. The rent from the paid off property is added to the rent from the new property to pay off the new property more quickly.

Another way it could work is, if your current property is in a high demand area, you could move into the new property (if itís not renting out), and rent out your current place. If you live in a city with low vacancy (for example, our condo is in Toronto where the vacancy rate is ~1-2%), then taking a HELOC to invest further is not a bad idea.

clarkfan1979

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Re: What do I do with 350k in equity?
« Reply #6 on: April 07, 2019, 11:25:38 AM »
If you did a cash-out fi with 20% down on a 600K house, you get a 480K loan. If you owe 250K, this leaves you 230K. After closing costs, you have 225K.

You have access to 225K with a cash-out refi. The numbers would be similar with a HELOC.

If it was me, I would buy a 100K house with cash that does not qualify for financing because of major repairs needed. The repairs needed would be in the 50K-75K range and the comps in the neighborhood should be 200K to 250K.