Thursday, January 23, 2014
Trouble with adding to the Real Estate Portfolio.
I am interested in adding an additional Rental property to the portfolio. This time though, I am wanting to to make a cash-only deal. I figured this would be as simple as refinancing my victorian house 1 (since it has the lowest balance and highest interest rate) and pulling cash out to throw down on the new property.
Here is the problem, TEXAS. When it comes down to it, the state of Texas is looking out for its homeowners to keep them from going over there heads in mortgage debt. With this, I found out I cannot take a second or a home equity line of credit on an investment property. I supposedly will get the 'evil eye' when I acquire a 4th mortgage too. So at this point my hands are tied.
Before I found this out I looked into getting a mortgage for the property. I learned that with Obama's new 'predatory lending' laws, any house I try to purchase under $60,000 will be considered a predatory loan because the banks $4,000 origination fees will be above the 5% loan amount threshold....
The local housing market here has homes dropping in price for the short term, making entry points more desirable for the long term. I have a few options here: One would be to continue saving away and waiting until I have the funds readily available. The second option would be to open up an unsecured line of credit. The third option would be to wait and continue driving down my various debts.
I'm thinking too that a 4th option would be to diversify my real estate portfolio by getting a rental property in a different town or even state... but I do like having my properties near by in case of emergency repairs etc.
What are your thoughts? What would you do in my situation? Imagine having 15k cash onhand, one investment mortgage of ~30k, and about 15k in the stock market.
Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.