Salty

iTrader: (14)

Focus on paying off the car. Simple.

Salty

iTrader: (14)

famink,

You're absolutely correct, sir. I have no idea what I’m talking about. I only happen to do this for a living as a mortgage broker. And it just so happens that I’m good at what I do.

Why would I give bad advice to a friend? So he won't return for business and not refer clients to me? Why would I do this?

And good call on paying off the mortgage before worrying about retirement. Maybe he can finally get around to his IRA/401k when he's 50+ yrs old.

famink

iTrader: (1)

you being good at something has nothing to do with how good others are. Remember a Mortgage Broker is someone who profits from others for not knowing how to do something for themselves. There is a need for people in the industry and it is easy to sell money, dreams, ect........Think about it you make what 1% of the loan, how can that be the best deal out there? ohh yah if I went to the Bank and got the loan myself I would not have the 1% higher rate?

the advice you gave above was bad and as a friend wanted to shead some light on the topic before he started down a path he didn't have all the information for.

Now for some what you have stated would work great if they had desposible cash for those types of ventures where they could rent out the property at a higher value and recieve income. Thats not what Matt was asking for?

as far as it taking 30 years to pay off a mortgage, well I would never wait that long. Did you know if you look at you mortgage statment and pay extra to the principle equal to the amount of the principle payment for that month you will take all the next months intrest away? meaning if you do this from the start you home loan will only take 12.5 years to pay off!!! 17.5 years intrest gone, bye bye. How much money do you save now? WOW mid 30's making the most money no mortgage debt free........or maybe now that I have extra money in my late 30's I might want to invest in more then just the market maybe a rental property?

EricDaRed81

iTrader: (10)

Hey Salty,

How did you turn this into a politics forum discussion. J/k

It follows you.

Salty

iTrader: (14)

Hey, great idea!

Rent out the property at a higher value and recieve income? I assume you mean the money generated by the difference, correct?

Who's going to want to rent from you if you're not taking a monthly loss? While you’re at it why don’t you go ahead and make up for the city utilities at the renters expense too?

As a potential renter, why not just buy a similar property and cash in on the equity yourself instead of renting?

That said, you don't make money off rental properties/renters by increasing the burden of rent to a higher value. You make money off renters by doing your homework on profitable areas and cashing-out on the equity that's being backed by the value of the land. Simple. You're expected to take that monthly loss unless you already own that property free & clear. But what would I know, right?

Doing otherwise takes the interest away from renting when the renter could could be an owner of an equal property. And if you're considering a free & clear rental then you better give Matt advice on how to purchase -and- payoff another mortgage in <30yrs.

If I have to explain landlord 101 to you then there's no sense in explaining how equity is already a non-liquidated asset that's already under Matt's feet. It's not a lien that's backed out of thin air... it's being backed by the equity in real property. This very equity in the land is expected to rise in the next decade to what the Bay Area is currently at.

With your logic I hope you never have the burden of applying for a Reverse Mortgage, sir.

Have a nice day and good luck to you!

famink

iTrader: (1)

I hope you dont take this personal but you didn't right the book: landlord 101 did you? and now you are changing your intrest only advice to buy with equity but only pay the intrest? you dont make much sence.

If you put 20% down on a home and rent it out as if you had put nothing down on the home wouldn't you see a 20% return on your money? I hope you dont have room mates

When purchasing a home to rent to others does not mean you have to rent it out lower then market value. I see it all the time its called apartments. you may not be awear of this sence you are a mortgage broker (key word being "broker") but most appartments rent out for higher then what a mortgage would be on a house. How can they do this simple - not everyone is ready to comit to a house or a location. example when I lived in Citrus Heights my mortgage was 1200, when I sold my home and was waiting for my new home to be built I payed 1295 for a smaller apartment 3 miles away from my old home.

now for some one in your field I shouldn't have to explain this to you but sence you think that I dont know what I'm talking about I should help. The best investment on this green Earth is land. Why? Do you see them making more of it anywhere? hehe. Unlike most investments land is a constant


I don't know what you know again I was trying to shead some light to what you posted above. Now you keep talking about equity but your advice was to hope your equity grows based on market demand while paying only interest instead of building the equity yourself by investing into principle. If you know how to do it why do you make it so complexed? Do you really think the renter knows what the market value is? Do you share with them how much you make or don't make off them? How do they know what burden you are putting on them? Money can be made if you set it up the right way and have a large down payment to offset what market value is to insure the property is both disired by the renter and profitable for the landlord

wow and I thought you had all the answers being so good at what you do...........Its is quite simple most renters will buy a house and thats why most landlords have rental agreements and terms, 6 month or 1 year, you dont expect a renter to live in your rental forever do you? No you expect to see several different renters over time, thus they may not mind paying your mortgage while they find a place of there own. Now again if this advice was going to be directed at Matt I would say it like this- Pay off you home mortgage!!!! debt free yah.......Find a home that might be a rental hey maybe its time for a new home!!!!!! Don't sell the home you have now, why you own it rent it out!!!!! Marvel Idea now take the money from your rented home and use it to pay the Principle for you new home!!!! Want to guess how long it will take you to own you second home? well if you use 60% of that rental income and put it straight to equity in your new home..........hows 7 years sound to pay off your second home

maybe I should make this simple for you also. Do you really think you own your home? You don't think that you loan is equal to a landlord (intrest only loan)? The only thing different is that you can sell the home and hope it built equity. Ask yourself - how long do you intend to live with an intest only loan/landlord? lets say you do it for 5 years (I like this number), how much is you intest? for example sake lets say its $1,000. So over the next five years you will spend $60,000. Do you really believe that you home will be 60K more equitable in the next five years, because thats what it will take just to get into the next house? Sure Sacramento is in the boom now but what about when it gets to real earnings? If you do it they way I showed and pay into the equity it frees you from your debt so you have more control over how you live verse always trying to refinace more debt. trust me you will be neck deep in it if you don't get out.

Salty again I dont mean to step on you feet but you put them out there and I have to say something. Comments like this also dont make me want to do business with you. If you have a intrest only mortgage you wont even be able to get a Reverse Mortgage loan

illy

iTrader: (5)

If you have car payments, the absolute 100% no brainer 1st step would be to pay off the cars and any credit card debt. After that, I am with Famink, paying extra on your mortgage principal is the best way to save for the future.

You know the drill....

If you pay say 8% interest on a 20k car loan then decide you want to "save" money so you put $100 a month into 1% APR savings account, you are 7% down from where you would be if you just put the extra $100 on the car loan principal. After the cars are done, the same applies to a mortgage. I am not "saving" another dime till my home is payed off (my suby already is fortunately).

Refinancing your home to interest only? I wouldn't do that under any circumstance, for any reason, ever... Just my 2 cents.

Hope my comments don't offend anyway, I am gonna step away from the podium and hope off this thread now. :-)

Salty

iTrader: (14)

What are you talking about? How did I do this?

All I ever mentioned was for Matt to pull the cash value from the land so he could invest the money into what ever he wanted. This very loan would/could be based on a fixed, interest only mortgage. The money would be liquidated from the equity he already has and be backed by rising land values!






This is because you were probably paying on the initial mortgage while property values went up, right? It's also why you probably had enough money to build your own house, right? You sold your existing property for it's value in Citrus Heights and pulled ALL it's worth into a pretty check. Meanwhile, property values increased and apartment rent also increased.

What you failed to mention is that you minimized your payments on the principle because you've had that mortgage for a long time. Nice little Rate and term will clear that up nicely and reduce your monthly payment.

You can charge more for rent in an apartment because you're still paying anywhere from ~$1000 less than a mortgage in that same area would cost you. There's NO WAY you could get away with doing this on a rental home. There wouldn't be any incentive to rent when the renter could just as easily buy their own home!

The demand to live in a home would have to be outragish in this "investors utopia." Don't you think builders would eventually figure this out and build more homes because of the demand?







What's so complex about it? The market is rising so much right now (and will continue to rise) that's there's literally no need to worry about the principle. The property alone will gain value far beyond the date that loan goes into effect.





YES! I would certainly hope so! It's not hard to figure this out on comparable.




It's funny you mention this because I’ve actually talked to Matt about a similar option via PM

Even though this is a possible idea there's still a major factor you're not taking into consideration. And that's the inflation of property values over a short period of time. By the time you pay off your current mortgage you're already defeated the purpose of buying a 2nd property because it's value has skyrocketed.

Instead, you can pull the existing equity out of your current property and purchase a rental property in Arizona NOW for the amount equity you pulled out. Then watch the equity in that property pay for everything in regards to that same TIME factor.

Real Estate Mongols don't make their money by tackling one property at a time. If they did then they'd probably have only 3-4 properties by the time they died. It’s your own prerogative ito be a conservative investor (which you are).


I think i'll manage but thanks anyway



Where do you get these assumptions from? I never said you can have an IO loan and get a reverse mortgage.

Do you honestly know what a Reverse Mortgage is? I do them from time to time...

There's no existing mortgage whatsoever if you're trying to get an Reverse Mortgage as you hold the deed. The bank pays you a monthly installment while taking a cut off the interest. What's your point?

I was trying to tell you that you may be **** up a creek when you decide to pull out money on your free & clear mortgage.

And you don’t have to business with me! But there’s something to be said about you attacking my posts when you think you know the business inside and out. You don’t.

Egan

iTrader: (14)

I think Matt's original question has been answered.