Posted by arlanj on July 18, 2005 at 16:14:30:
You will pay Cap Gain Tax on the difference between what you get and what you spend.
I would buy an sell as many as possible making $10,000 each. You should be able to quit your day job long before 3 years.
newbie needs advice - Posted by Ann (TX)
Posted by Ann (TX) on July 18, 2005 at 14:49:17:
My dilemma is this. I am about to purchase a 3/2 for around 36,000 with an equity line of credit from my primary residence as an investment property. (terms: prime/interest only) After about 8,000 in repairs, I figure it will be worth around 55,000. It should rent for around 700/month. I want to purchase another 3/2 with about the same scenario.
Would it make more sense to take out another equity line of credit on the first rental to buy the second, or should I cash out refinance? If I cash out refinance will I have to pay cap gains on the 36,000 when I sell, or the refinanced amount?
My plan is to hold these properties for three years, then sell, so I can pay down my first mortgage so I can quit my job and be a stay at home mom. Hope that makes sense. Any help would be appreciated. Also, my credit?s low 700s, income is around 150,000. Thanks.
Re: newbie needs advice - Posted by Devon Daughety
Posted by Devon Daughety on July 18, 2005 at 19:01:21:
You may be counting your eggs before they’ve hatched or whatever the saying is. Have you looked into HELOC’s and refi’ing on investment properties?? ITts definitely NOT like primary residence. For HELOC on investment property you’re only going to be able to pull out 80%. And for cash out refinance, you usually need 12 moths ownership (seasoning). If you are able to find a lender with no seasoning requirements for CASH OUT the most you will probably get is 85%. Don’t be fooled by people that say they can do 100% believe me, I’ve been around the block for a while and every client thats said i have a lender that says they can do 100% always comes back to me empty handed
Re: newbie needs advice - Posted by Michael Steele
Posted by Michael Steele on July 18, 2005 at 16:15:36:
The first thing is it looks like you found a great buy, as far as the 2nd property of weather or not you should do another credit line rather than cashing out depends on the interest rate you can get your credit line for. If you have the equity and credit to cash out at an interest rate much lower than what credit lines are going for right now (interest only) than that might be the way to go. On the other hand if you goal is a flip and just to use the credit line to obtain the property – fix it up – sell it and make a profit and take that profit and pay down the credit line to use all over again than that might be the way to go. That way your not stuck in a fixed payment the entire time. Keep in mind the lowest interest rate shall provide the lowest payment (preferabley the cash out refi) but if that is an issue for you then go with the equity line of credit.
Hope that helps
Michael Steele