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Started By
Message
Selling house to take equity and invest - giving up 3% IR
Posted on 8/4/22 at 10:41 am
Posted on 8/4/22 at 10:41 am
TLDR: Thinking of selling my home, taking profits, and renting for a year while the markets adjust. I want to invest my profits in RE. I’ll be personally building my next home while renting. I am in my 30’s.. I have a higher risk tolerance.
I’m curious about MT’s opinion for taking profits on a home knowing that we’re going to continue to see more rate hikes (possibly followed by reduced rates)
My situation, similar to others… all assets are down, with the exception of my home. I have a lot of equity and a 3% mortgage.
I want to take profits on my home so that I can invest in other projects. Rental property and possibly a residential construction project. I realize that I’d be getting out of a 3% fixed, which on the surface seems like a bad idea. But I also have a lot of dead equity locked up that I can’t use.
Selling my house would tilt my personal balance sheet favorably in terms of my D/E, D/A, and current ratios.
I am maxing out my 401k and Roth IRA while the market is down and feel like it’s wise to continue to do so.
Most agree that we are in a recession, or are moving into a recession. Some believe that QE and potential IR decreases could come next year.
My thoughts are that I can sell and take profits to help finance a construction project and acquire a rental property, essentially putting my money back to work while I simultaneously invest in this down equities market. The only risk that I see is that I’m getting out of a 3% fixed IR, for who knows what’s coming down the road. My personal thoughts are that rates will come back down, but not back down to 3%.
One last important note: I also have a side business building residential homes. Although I’d likely be buying back into a higher mortgage rate, I’d still have the benefit of saving a builder fee, adding to my instant equity.
I’m curious about MT’s opinion for taking profits on a home knowing that we’re going to continue to see more rate hikes (possibly followed by reduced rates)
My situation, similar to others… all assets are down, with the exception of my home. I have a lot of equity and a 3% mortgage.
I want to take profits on my home so that I can invest in other projects. Rental property and possibly a residential construction project. I realize that I’d be getting out of a 3% fixed, which on the surface seems like a bad idea. But I also have a lot of dead equity locked up that I can’t use.
Selling my house would tilt my personal balance sheet favorably in terms of my D/E, D/A, and current ratios.
I am maxing out my 401k and Roth IRA while the market is down and feel like it’s wise to continue to do so.
Most agree that we are in a recession, or are moving into a recession. Some believe that QE and potential IR decreases could come next year.
My thoughts are that I can sell and take profits to help finance a construction project and acquire a rental property, essentially putting my money back to work while I simultaneously invest in this down equities market. The only risk that I see is that I’m getting out of a 3% fixed IR, for who knows what’s coming down the road. My personal thoughts are that rates will come back down, but not back down to 3%.
One last important note: I also have a side business building residential homes. Although I’d likely be buying back into a higher mortgage rate, I’d still have the benefit of saving a builder fee, adding to my instant equity.
7
Posted on 8/4/22 at 11:47 am to JCPegasus
quote:
TLDR: Thinking of selling my home, taking profits, and renting for a year while the markets adjust. I want to invest my profits in RE. I’ll be personally building my next home while renting. I am in my 30’s.. I have a higher risk tolerance.
I’m curious about MT’s opinion for taking profits on a home knowing that we’re going to continue to see more rate hikes (possibly followed by reduced rates)
My situation, similar to others… all assets are down, with the exception of my home. I have a lot of equity and a 3% mortgage.
I want to take profits on my home so that I can invest in other projects. Rental property and possibly a residential construction project. I realize that I’d be getting out of a 3% fixed, which on the surface seems like a bad idea. But I also have a lot of dead equity locked up that I can’t use.
Selling my house would tilt my personal balance sheet favorably in terms of my D/E, D/A, and current ratios.
I am maxing out my 401k and Roth IRA while the market is down and feel like it’s wise to continue to do so.
Most agree that we are in a recession, or are moving into a recession. Some believe that QE and potential IR decreases could come next year.
My thoughts are that I can sell and take profits to help finance a construction project and acquire a rental property, essentially putting my money back to work while I simultaneously invest in this down equities market. The only risk that I see is that I’m getting out of a 3% fixed IR, for who knows what’s coming down the road. My personal thoughts are that rates will come back down, but not back down to 3%.
One last important note: I also have a side business building residential homes. Although I’d likely be buying back into a higher mortgage rate, I’d still have the benefit of saving a builder fee, adding to my instant equity.
Nobody who can put together a well written synopsis like this should be renting imo. But with your 2 posts in 3 years, you're an alter and are just trolling for shites and giggles. I get it. Carry on.
Posted on 8/4/22 at 12:31 pm to JCPegasus
Can't you just borrow against the equity in your home to finance the construction project? Or if the project is 6mos-8mos, you should be able to borrow against your retirement and have the money back in before there is much of an effect. To me, the anticipated profits don't seem worth the pain in the arse of moving/ renting and fees you'll incur with closings. I would look for the money elsewhere.
Posted on 8/4/22 at 12:31 pm to JCPegasus
I live in rural BFE - house just down the road sold for nearly $200 a heated square foot.
Me and Mrs. KTG will be living in a mobile home or 5th wheel if our house can sell for anywhere near that.
Me and Mrs. KTG will be living in a mobile home or 5th wheel if our house can sell for anywhere near that.
Posted on 8/4/22 at 12:34 pm to Tomatocantender
Lol… Not an alter, but I will admit… part of my morning routine consist of scrolling this place.
I’ve learned a lot from MT in the past few years, but I’m at an interesting place where my financial intelligence has progressed enough to understand what’s being discussed and what’s happening in the market, but probably not enough to understand every downside risk.
Truthfully, selling my house is not something I’ve considered until two days ago. I’m not convinced that it’s a good idea, so I guess I’m looking for some confirmation bias.
I have my regular day job, a small side business building spec houses (1-2 a year), and I want to get into rentals. Since my ambition is out running my capital, I started to think of different and creative ways to finance these projects.
I’ve learned a lot from MT in the past few years, but I’m at an interesting place where my financial intelligence has progressed enough to understand what’s being discussed and what’s happening in the market, but probably not enough to understand every downside risk.
Truthfully, selling my house is not something I’ve considered until two days ago. I’m not convinced that it’s a good idea, so I guess I’m looking for some confirmation bias.
I have my regular day job, a small side business building spec houses (1-2 a year), and I want to get into rentals. Since my ambition is out running my capital, I started to think of different and creative ways to finance these projects.
Posted on 8/4/22 at 1:42 pm to JCPegasus
No way in hell would I rent in this market
Posted on 8/4/22 at 1:58 pm to JCPegasus
I think it’s a bad idea simply because I don’t include home equity on my balance sheets or view home equity as an investible asset. You always need a roof over your head. Just my view, but the only thing home equity should go to is acquiring or improving that roof. You are in your 30s. It’s a long life and owning your home outright in retirement should be goal. Don’t subtract from your home equity at this stage in your life.
Posted on 8/4/22 at 6:08 pm to ned nederlander
I do not disagree with you. I like to view my balance sheet with and without the home equity, so I use an adjustment formula to give me a quick view without the home equity.
Seemed like a crazy idea at first, but my thoughts were that the equity could be better leveraged elsewhere while we reposition for a potential pivot to a buyers market and get a decent rental deal.
I’d be trying to turn one asset into two assets. A rental unit, and the new home.
I was going to build next year anyway. In this scenario, I’d just be building for myself.
I wouldn’t be in this predicament if I was sitting in cash, but I decided to fully invest it in equities with this current buying opportunity.
Seemed like a crazy idea at first, but my thoughts were that the equity could be better leveraged elsewhere while we reposition for a potential pivot to a buyers market and get a decent rental deal.
I’d be trying to turn one asset into two assets. A rental unit, and the new home.
I was going to build next year anyway. In this scenario, I’d just be building for myself.
I wouldn’t be in this predicament if I was sitting in cash, but I decided to fully invest it in equities with this current buying opportunity.
Posted on 8/4/22 at 6:11 pm to JCPegasus
This could end well, and this could also end poorly. Probably not worth it.
Posted on 8/4/22 at 7:34 pm to JCPegasus
Should have done this 10 months ago.
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