What should I do? 140K? - Posted by Anon

Posted by Kim in Kansas City on January 22, 2008 at 10:48:45:

Boy I had a great reply but forgot to hit post. let’s see if I can repeat it.

First - what will a dream home do for you now but give you shelter, while you come out of pocket a few hundred a month to cover the mortgage less rents on your current home.

So stay put.

You are also sitting on a 15 year interest only loan, so you are gaining no ground. Refinance and use some of the $140,000 to pay down to an amortizing 30 year fixed loan. Then maybe rent it out in a year or two down the road as you will have a much lower mortgage payment.

Now that leaves you with $100,000 to do something with.

All the experts say, build up a rainy day fund in case you are sick and can’t do deals or in case a great deal comes along and you want a down payment or something. But I would probably go house poor and invest it all myself.

Some investment ideas.

Here in our market and many midwestern markest you can buy a very nice house from between $89,000 to $100,000 and have it cash flow, go to the urban core and buy, fix up, ,and rent and you can buy for about 70 cents on the dollar.

So take your $100,000 and buy 10 houses that will bring in at least $200 a month in cash flow, that pockets you $2000 a month or $24,000 a year - great part time job . . . Plus its a down market and the proeprties will appreciate . . . more income

Idea 2. Buy into a small multi family property that will cash flow.

Idea 3. Become a private lender and earn 10, 12, 15 % interest passivly

Idea 4 Become a hard money lender and earn 15 % interest and 5 points.

just some ideas . . .

What should I do? 140K? - Posted by Anon

Posted by Anon on January 22, 2008 at 10:09:29:

I currently live in Phoenix, AZ. My career in the government sector, so my position is pretty secure. I have two homes in the area, one is my primary home, and the other is my investment property; as I’m sure all know, the market has tanked.

Primary Home: Balance $250k, monthly payment $1700 IO loan fixed for 15 years, potential rental income $1500 per month.

Investment Home: Balance $120k, monthly payment $1100 30year fixed loan, getting $1350 rental income. Both homes are less than 10 years old. So repair should be minimal.

I just inherited $140k. My question to you guys is…

  1. Payoff the investment home, and just save my rental income.
    Pros: No worries
    Cons: May miss investment opportunities

  2. Buy my dream home, and rent out my current home, and lose est. $200 per month rental income. Not that I dislike my current home, I would like one in a nicer area and a bit bigger.
    Pros: I get my home, potential gain in current home as well as the new home when market goes back up
    Cons: Lose $200+ per month renting out my current home.

  3. Buy 1 or 2 investment properties when prices drop enough where I would either break even or have positive cash flow.
    Pros: Potential gain when the market goes back up
    Cons: When the market goes back up, so will my dream home.