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Message
re: Buying new home - Renting current townhouse
Posted on 12/28/23 at 5:26 pm to itsbigmikey
Posted on 12/28/23 at 5:26 pm to itsbigmikey
-Refinanced in 2021 to a 15 year conventional at 2.25% and now owe $140,000
--
With 12 years remaining, you are paying down the mortgage at about $1,000 a month. That's money in the bank.
$140,000/12 years= $11,667 Average annual paydown.
--
With 12 years remaining, you are paying down the mortgage at about $1,000 a month. That's money in the bank.
$140,000/12 years= $11,667 Average annual paydown.
This post was edited on 12/28/23 at 5:30 pm
1
Posted on 12/28/23 at 6:28 pm to ItzMe1972
According to all mortgage calculator a 450k home with 20% down comes to 3700 a month at 6.5% interest. He will be house poor financing 600k on 200k income IMO. But I’m super conservation and my house note is only 12% of my take home.
Posted on 12/28/23 at 7:55 pm to tigerbacon
Right. Financing >$600k on that income would have my butt hole pretty tight. Although, maybe expecting pay increases but those will be offset somewhat by building a family over the years. Either way, not point of OP post, just caught my eye.
Posted on 12/28/23 at 8:20 pm to itsbigmikey
1. Remain in the townhome and save for a down payment until interest rates come down. Unless you’re using a VA loan and have 800 credit, you’re not going to get less than 6%. You might be able to buy down to 4% in 2 years or so.
2. If your wife insists you move, here’s my advice as an owner of 4 rental properties (3 family homes and 1 condo):
a. Don’t use a property manager. They will swallow a huge chunk of your net pay. We use Zillow to advertise and screen rental applicants (each prospective tenant applies through Zillow for a nominal fee, and Zillow gives you their credit history and criminal background check).
b. Have a solid lease. My wife is a lawyer so she takes the lead on this, but we use a standard Virginia lease form and add anything else we want to enforce.
c. SCREEN TENANTS. This may be the most important thing. In addition to a high credit score and good rental history, you have to meet with them and ask yourself if you would want them living in your home. Based on my experience I avoid non-married partners, multiple large dogs (I will consider one small dog), and tenants with children that outnumber the rooms in the house.
2. If your wife insists you move, here’s my advice as an owner of 4 rental properties (3 family homes and 1 condo):
a. Don’t use a property manager. They will swallow a huge chunk of your net pay. We use Zillow to advertise and screen rental applicants (each prospective tenant applies through Zillow for a nominal fee, and Zillow gives you their credit history and criminal background check).
b. Have a solid lease. My wife is a lawyer so she takes the lead on this, but we use a standard Virginia lease form and add anything else we want to enforce.
c. SCREEN TENANTS. This may be the most important thing. In addition to a high credit score and good rental history, you have to meet with them and ask yourself if you would want them living in your home. Based on my experience I avoid non-married partners, multiple large dogs (I will consider one small dog), and tenants with children that outnumber the rooms in the house.
Posted on 12/28/23 at 9:43 pm to itsbigmikey
Sell the townhouse. Take the profits tax free. Refer to the 2 in 5 rule. You’ll be kicking yourself if you miss the deadline and have to cut Uncle Same a big check.
800K house in Nashville is great depending on the suburb, but you need a huge down payment to keep your sanity.
800K house in Nashville is great depending on the suburb, but you need a huge down payment to keep your sanity.
Posted on 12/29/23 at 6:25 am to tigerbacon
quote:
Why an 800k house?
I think something got lost in translation here. I would be looking for something probably in the mid 600K's and would max go 750k if the money worked. I appreciate all of the input though!
Posted on 12/29/23 at 7:19 am to itsbigmikey
Here’s what you want to consider, the ROI on the value of your house not necessarily what you paid or owed. If you can get $2500/ month but your home is worth $400k, that’s 7.5% gross rent to value. Not that great, most people shoot for over 10 or sell.
If you are making less than 8% and your mortgage is 6-8% and you can sell it tax free, imo taking the equity out for a down payment makes more sense.
But with a low mortgage interest and good rent coming in then I also understand wanting to diversify investments and get that cash flow starting.
The biggest rule of thumb, is don’t rent something you wouldn’t Otherwise buy to rent out. Look at yourself in the mirror and ask yourself if you would buy this home at $400k and rent it out. If not, strongly consider selling.
If you are making less than 8% and your mortgage is 6-8% and you can sell it tax free, imo taking the equity out for a down payment makes more sense.
But with a low mortgage interest and good rent coming in then I also understand wanting to diversify investments and get that cash flow starting.
The biggest rule of thumb, is don’t rent something you wouldn’t Otherwise buy to rent out. Look at yourself in the mirror and ask yourself if you would buy this home at $400k and rent it out. If not, strongly consider selling.
Posted on 12/29/23 at 8:33 am to baldona
Interesting thought. Thank you
Posted on 12/29/23 at 10:39 am to itsbigmikey
quote:
a yard for our dog
quote:
and children
You don't have any yet - and if you did, their play space has nothing to do with the townhouse with no yard
quote:
I also am ready to not share walls with anyone
same with everyone else - ditch it and deep dive safe investments or equity with the cash
Posted on 12/29/23 at 10:47 am to Jag_Warrior
quote:
I’d do exactly what he’s considering without hesitation. As long as his estimate of rental income is fairly accurate, even with a management fee, this one has written all over it IMO.
What if his job has to change?
If he's a mechanical engineer he can work from home for a company anywhere in the world.
But what if he has to move to Denver?
What if alot of things and you're young and all the sudden you have 2 mortgages and you're also paying rent to work in Denver?
Posted on 12/29/23 at 10:50 am to Grinder
quote:
Sell the townhouse. Take the profits tax free. Refer to the 2 in 5 rule. You’ll be kicking yourself if you miss the deadline and have to cut Uncle Same a big check.
yep
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