Suggestion on buying/selling homes? | TigerDroppings.com

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OneFifty
LSU Fan
Cenla
Member since Aug 2012
960 posts

Suggestion on buying/selling homes?


Less than 100k & 9 yrs remain on my mortgage. Last appraisal was 152k (5acres 2000 sqft). I have an opportunity to purchase a <10 yr old 2000 sq ft home with an adjacent 1000 sf guest house on 3 acres for 180k that appraised for about 250k.

Would it be wiser to just sell prop 1 and use the equity to purchase prop 2, or should I use the equity I can borrow from prop 2 to pay down, refi, and rent prop 1?

Really in uncharted territory on this one. Would greatly appreciate opinions from those with real estate experience?







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Latebloomer
LSU Fan
Passing through
Member since Jul 2012
151 posts

re: Suggestion on buying/selling homes?


It will depend on what you can rent property 1 for. Would the rent cover the mortgage payment, taxes & insurance? Do you need the acreage that it is sitting on? Usually rentals in town on a regular lot cash flow better than a house out on acreage. How much cash were you plannning on putting down on property 2 if you don't sell property 1? Why would you want to refinance Property 1 if you keep it - is the interest rate above 4.5%? Just a few things to think about.





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OneFifty
LSU Fan
Cenla
Member since Aug 2012
960 posts

re: Suggestion on buying/selling homes?


-I could use equity from prop 2 to pay prop 1 way down. If i did, The rental probably wouldn't cover the mortgage & insurance, but I could make up the difference until it was paid off. BTW, prop 1 is rural, splitting land not an option. (I was thinking about the refi to get mortgage note down)

-prop 1 rate is 4.0(latest cred rating was 830, so I'm thinking i could do better than that now..not sure what rate is at)

-if prop 2 appraisal holds up, I think I could mortgage 225,000, price is only 180k. That extra 45 k could pay down prop 1 to where I could pay it off in 2 yrs, or refi it for a light note that the rent would easily cover. Does that make sense?

I'm just trying to figure out if there's a smart way to keep both places for my progeny.






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Mr.Perfect
Louisiana
Member since Mar 2013
4730 posts

re: Suggestion on buying/selling homes?


Congrats on the find. Would love this problem





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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
6239 posts

re: Suggestion on buying/selling homes?


quote:

-I could use equity from prop 2 to pay prop 1 way down. If i did, The rental probably wouldn't cover the mortgage & insurance, but I could make up the difference until it was paid off. BTW, prop 1 is rural, splitting land not an option. (I was thinking about the refi to get mortgage note down) -prop 1 rate is 4.0(latest cred rating was 830, so I'm thinking i could do better than that now..not sure what rate is at) -if prop 2 appraisal holds up, I think I could mortgage 225,000, price is only 180k. That extra 45 k could pay down prop 1 to where I could pay it off in 2 yrs, or refi it for a light note that the rent would easily cover. Does that make sense? I'm just trying to figure out if there's a smart way to keep both places for my progeny.


The way to do it is take out an investor loan, you'll be looking at around 5 - 5.25% over 30 years for that product, putting down 20-25%. Everything else is spinning your wheels, over thinking scenarios that are not possibilities unless you can find some type of private lender who's willing to do all what you're asking.

But I Could Be Wrong






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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
7200 posts

re: Suggestion on buying/selling homes?


Sell property one. Buy property two. If you're itching to be a landlord, rent the guest house out on property two to get your feet wet.

How much would property one be worth if it was on a 1/4 acre lot? Acreage doesn't really increase what you will get for rent, plus you pay additional property taxes due to increased value from the lot, and have to mow five acres weekly in the summer.






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dcrews
UNO Fan
Baton Rouge
Member since Feb 2011
8183 posts

re: Suggestion on buying/selling homes?


quote:

and have to mow five acres weekly in the summer.


Or he could stipulate in the rental agreement that whoever is renting the house is responsible for mowing the grass. I (along with 2 other people) rented a house that had a fairly large lot on the side, and we were responsible for keeping up the yard.



This post was edited on 7/30 at 8:52 am


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VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
10869 posts

re: Suggestion on buying/selling homes?


quote:

-if prop 2 appraisal holds up, I think I could mortgage 225,000, price is only 180k


You can't do this. You can only mortgage a percentage of the purchase price, not more than the purchase price. There is no such animal as a cash out mortgage on a purchase. To do a cash out refi later to do what you want you will need to have at least 6 months seasoning on the new mortgage on property 2.



This post was edited on 7/30 at 9:20 am


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OneFifty
LSU Fan
Cenla
Member since Aug 2012
960 posts

re: Suggestion on buying/selling homes?


Yeah, I'm mowing 5 acres now --not a field, basically a fairway--I hit golf balls on it all the time.

Prop 1 is rural, and the layout isn't that conducive to dividing the property. I'm not really that keen to being a landlord. I basically built and developed prop 1, our first owned home, so there's a sentimental element, but I'm trying to see if there's a reasonable way to keep it for one of the children for when they're older.

The guest house on prop 2 is connected by a breezeway. I don't think I'd want to rent it--too close for comfort. And it's so nice and open, I could see us spending a lot of time there, especially on LSU football Saturdays.

I guess I'll find out if the equity in both homes is enough for lenders to work with me. If not, I'll sell outright and basically have the same mortgage, but two homes. Love my home--comfortable and practical..but it's hard to pass on the 2nd. It's the kind of home you want to retire in. It's not listed. A widower who has become a close friend just suggested it out of the blue one day.

Thx for poster's comments/suggestions.






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OneFifty
LSU Fan
Cenla
Member since Aug 2012
960 posts

re: Suggestion on buying/selling homes?


quote:

You can't do this. You can only mortgage a percentage of the purchase price, not more than the purchase price. There is no such animal as a cash out mortgage on a purchase. To do a cash out refi later to do what you want you will need to have at least 6 months seasoning on the new mortgage on property 2.


THIS, I didn't know. Great info.

Not worried about the 2 mortgages, supposing lenders will do. I could supplement what the prop 1 rent doesn't cover, and check into a refi on prop 2 later.

THX much...that'll save me the embarrassment of having a lender tell me this.






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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
6239 posts

re: Suggestion on buying/selling homes?


quote:

You can't do this. You can only mortgage a percentage of the purchase price, not more than the purchase price. There is no such animal as a cash out mortgage on a purchase. To do a cash out refi later to do what you want you will need to have at least 6 months seasoning on the new mortgage on property 2.


That's what I said, investor loan or private lender.






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