HELOC for dwnpmt (by JamesD [CO]) Sep 23, 2009 11:53 AM
HELOC for dwnpmt (by Jason PA [PA]) Sep 23, 2009 12:07 PM
HELOC for dwnpmt (by srm [IL]) Sep 23, 2009 12:09 PM
HELOC for dwnpmt (by MrRational [MD]) Sep 23, 2009 12:13 PM
HELOC for dwnpmt (by Brian [MN]) Sep 23, 2009 12:15 PM
HELOC for dwnpmt (by Reid [KS]) Sep 23, 2009 12:17 PM
HELOC for dwnpmt (by John... [MI]) Sep 23, 2009 12:22 PM
HELOC for dwnpmt (by Reid [KS]) Sep 23, 2009 12:33 PM
HELOC for dwnpmt (by JamesD [CO]) Sep 23, 2009 12:38 PM
HELOC for dwnpmt (by JamesD [CO]) Sep 23, 2009 2:20 PM
HELOC for dwnpmt (by John... [MI]) Sep 23, 2009 2:28 PM
HELOC for dwnpmt (by ManateeAlley [FL]) Sep 23, 2009 2:55 PM
HELOC for dwnpmt (by MrRational [MD]) Sep 23, 2009 3:10 PM
HELOC for dwnpmt (by JamesD [CO]) Sep 23, 2009 3:10 PM
HELOC for dwnpmt (by Matt [MD]) Sep 23, 2009 3:38 PM
HELOC for dwnpmt (by Chris [CA]) Sep 23, 2009 3:42 PM
HELOC for dwnpmt (by p m h [TX]) Sep 23, 2009 5:23 PM
HELOC for dwnpmt (by Robert J [CA]) Sep 23, 2009 6:46 PM
HELOC for dwnpmt (by 574-Brad [IN]) Sep 23, 2009 9:50 PM
HELOC for dwnpmt (by Ray [OH]) Sep 24, 2009 2:03 PM
HELOC for dwnpmt (by Smokowna [MD]) Sep 24, 2009 5:46 PM
HELOC for dwnpmt (by JamesD [CO]) Posted on: Sep 23, 2009 11:53 AM Message:
Does it make sense to use HELOC to fund downpayment on a property?
In our case it's a new 4-plex near our house located in a neighborhood that has predominantly SFHs - it's an expensive property ($400K) but it's also new and requires no work at all - has long terms tenants. Assuming the numbers make sense and we get positive cash flow each month does it make sense to to use the HELOC (about $130K remaining) for the downpayment on this property?! Want to keep our savings as cash reserves.
James
--32.97.xxx.xxx |
HELOC for dwnpmt (by Jason PA [PA]) Posted on: Sep 23, 2009 12:07 PM Message:
Absolutely. --74.99.xxx.xxx |
HELOC for dwnpmt (by srm [IL]) Posted on: Sep 23, 2009 12:09 PM Message:
This is difficult to say since we don't know all the particulars.
We don't know the income. Have you figured the estimated CF, ROI,DCR and do you have a lender on the hook who is cool with the HELOC down payment. --24.14.xxx.xxx |
HELOC for dwnpmt (by MrRational [MD]) Posted on: Sep 23, 2009 12:13 PM Message:
If you don't have a rich Uncle Charlie to hit up for the cash then you have to actually take a risk by mortgaging your own home.
But! (and it's a big 'ol but) $400k for any one property is a whole other can of worms. Some parts of the country demand it but I'd still much rather have 5 $80K properties than one at $400K ya know?
My GF Suze would say **DENIED!** (but I still think she's hot)
--65.127.xxx.xxx |
HELOC for dwnpmt (by Brian [MN]) Posted on: Sep 23, 2009 12:15 PM Message:
We just bought our forth unit with a downpayment from our HELOC. It was a no brainer since the unit cash flows over $500 a month. If the numbers work, do it. --64.213.xxx.xxx |
HELOC for dwnpmt (by Reid [KS]) Posted on: Sep 23, 2009 12:17 PM Message:
Put your Home in Jepardy ? I say no way. I was ready to put my home up for collateral for A "can't lose deal" And My dad said I was an Idiot Thank God I listened to him cause the "Golden" deal went south . I lost a bunch of money but not my home . --70.249.xx.xxx |
HELOC for dwnpmt (by John... [MI]) Posted on: Sep 23, 2009 12:22 PM Message:
It is unlikely that anyone here is going to jump on it or anything -- so why not post the actual numbers? You'll get much better advice if you put up the full numbers.
- John...
--64.25.xxx.xxx |
HELOC for dwnpmt (by Reid [KS]) Posted on: Sep 23, 2009 12:33 PM Message:
Brain(MN) when you say it cash flows $500/ month do you mean it nets $500/ month after all other expenses ? That's $6000.00 / yr ? On how much of an investment ? --70.249.xx.xxx |
HELOC for dwnpmt (by JamesD [CO]) Posted on: Sep 23, 2009 12:38 PM Message:
Still getting the numbers together - when I have them I'll post here for comments - thx,
James
--32.97.xxx.xxx |
HELOC for dwnpmt (by JamesD [CO]) Posted on: Sep 23, 2009 2:20 PM Message:
Here are the numbers that we have gathered:
It's a 4-Plex each unit has 2BD/1BA - the monthly rent is $850 for each unit. Purchase price $399,900 (before any negotiations).
INCOME
Gross Scheduled Income = $40,800
Vacancy Allowance (10%) = (4080)
Gross Operating Income = $36,720
EXPENSES:
Insurance = $1,500
Taxes = $2,919
Utilities (Water/Sewer) = $1,800
PM (10%) = $3,672
Total Expenses = $9,891
NET OPERATING INCOME = $26,829
Annual Debt Service (First Mgt) = $23,638 (assuming 6.25% @360mnths with 20% down = $1969.80 monthly)
Cash Flow b/taxes = $3,191
ROI = 4%...
THese numbers do NOT include the finance charges (interest) we'd need to pay for the HELOC - not sure how to compute that into the equation... 2nd mortgage?! Our HELOC rate is around 2.74% and we have $130K available.
I know the 4% don't sound like much... We have another condo and are getting better returns on it...
Comments?! Thx,
James
--98.245.xx.xxx |
HELOC for dwnpmt (by John... [MI]) Posted on: Sep 23, 2009 2:28 PM Message:
Running that through my normal stuff, I show that as cashflowing only $150-$200 per month. And that is ignoring the HELOC completely (i.e. just assuming that you actually put 20% cash down that you had).
So, to me, it's a complete loser. But, real estate is always local. I don't know your area and potential for future sales. Some people feel that if it cashflows at all, then it is worth it for future appreciation. But, I'm not one of those people -- at least, not in a building starting at $400k!
- John...
--64.25.xxx.xxx |
HELOC for dwnpmt (by ManateeAlley [FL]) Posted on: Sep 23, 2009 2:55 PM Message:
I don't think Mr. Rational got the memo that "Suzie" plays for the other team...."The Carpet-lickers" ! --66.176.xxx.xxx |
HELOC for dwnpmt (by MrRational [MD]) Posted on: Sep 23, 2009 3:10 PM Message:
"It's a 4-Plex each unit has 2BD/1BA - the monthly rent is $850 for each unit."
that doesn't even pass the useless 1% rule.
Next! --65.127.xxx.xxx |
HELOC for dwnpmt (by JamesD [CO]) Posted on: Sep 23, 2009 3:10 PM Message:
>>.. "Suzie" plays for the other team....<<
Say it ain't so.... :( --98.245.xx.xxx |
HELOC for dwnpmt (by Matt [MD]) Posted on: Sep 23, 2009 3:38 PM Message:
I used a HELOC for my commercial property and it turned out very well. Was able to cash out refinance this year and pay off the HELOC so it now stands on its own.
However, make sure the numbers are slam dunk profitable or make sure you have plenty of extra cash in your day job. In other words, don't make a mistake and lose your home.
BTW... I would factor in a monthly repair cost of about 1% of the list price ($400) to cover incidentals. Also, you need to factor in a deferred maintenance reserve in your numbers for HVAC, roof, etc.
My opinion... at these numbers I wouldn't do it. If you can get this for $50K less then it might be worth it. --68.54.xxx.xxx |
HELOC for dwnpmt (by Chris [CA]) Posted on: Sep 23, 2009 3:42 PM Message:
Good for you if you can pull this off financially. But have you ascertained it would be a deal? 4 400 k seems kinda high to me. There is a 2004 duplex which initially sold for nearly $ 300 k to be had for $ 110 k. 1,710 ft, 2 car garage, dubious neighborhood but surrounded by 22 other similar duplexes. Rent" $ 750 for each side likely, $ 700 positively.
Just don't fall in love with a property. This one, how would it cash flow? What was the cost to build it?
Think VALUE. Estimate the fixed costs and vacancies and repairs. If you are getting around $ 3,000 rent when the place is fully rented, this may not fly. --125.25.xx.xx |
HELOC for dwnpmt (by p m h [TX]) Posted on: Sep 23, 2009 5:23 PM Message:
absolutely not worh it. pass. and move on.
suzie has lived with her girlfriend for years. suzie also provides nonsensical advice. --71.11.xxx.xxx |
HELOC for dwnpmt (by Robert J [CA]) Posted on: Sep 23, 2009 6:46 PM Message:
Once upon a time in California it was illegal to use borrowed money for a downpayment. So if one's parents were lending a couple money to buy their first home, the parents would have to write a letter to the bank that the "loan" is a "gife" and doesn't have to be paid back. The only security the bank has is the downpayment. Your credit report won't show that you used you HELOC to fund escrow -- so in fact you are committing a fraud upon the bank, a federal crime. On the other hand if you took the money out of your savings account, closed escrow and then put the HELOC money into the bank, the next effect would be as you wished. But if you don't have money to cover the downpayment then you shouldn't be buying another property. People, am I crazy? yes, no or maybe? --98.119.xxx.xx |
HELOC for dwnpmt (by 574-Brad [IN]) Posted on: Sep 23, 2009 9:50 PM Message:
That deal sucks. You will lose money. Keep shopping. --66.228.xxx.xxx |
HELOC for dwnpmt (by Ray [OH]) Posted on: Sep 24, 2009 2:03 PM Message:
Absolutely Not. Just looking at your numbers that is only $3,191 per year (about $266 per month)and that is before any maintenance and repairs. --65.214.xx.xx |
HELOC for dwnpmt (by Smokowna [MD]) Posted on: Sep 24, 2009 5:46 PM Message:
For me to be interested the top price would not exceed $238,000 - $260.000 range.
--71.191.xxx.xxx |
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