[USER]

Hello all, please give me suggestions on how I can purchase a second home. $170K in equity on first home and no other debts. 820 credit score.

I don’t have enough cash sitting around since I’ve been maximizing out my retirement accounts on my single azz income and I travel abroad every year (will slow down since I’m getting old and tired).

What would be my best option to purchase a 2nd home in the 350K range?

1. Home equity loans
2. HELOCS
3. Cash out refinance
4. Borrowing from 401K
5. Suga-daddy…just kidding

I want to test the water with renting since I’ve done a little bit of that before when I moved in with my ex.

Not in love with my current home so I can just sell it if I ever get tired of playing landlord.

Thank you so much in advance!!!

[Watson]

I want to say yes.

If you are sick of your home, and want to get into land lording then I would purchase a multi unit and move into that. Rent out your current home.

Use FHA to get a 2-4 unit house.
The change of pace would be good for you. It will keep you busy.

Your dating life will suck but hey you probably won’t notice from all the work you will be doing.

Good luck

[Scott]

Borrowing at today’s rates will almost certainly put you in a negative cash flow position and that’s with 25% down that you don’t have.

I personally have 6 rentals and I’m not looking to add to that portfolio until rates come down.

I would save up a 25% down payment, and then re evaluate the rates and your ability to handle negative cash flow at that time.

Ideally you want the rate to be 5% or lower to squeak out positive cashflow.

Lastly, if you are a high income earner and you can justifiably say you actively manage your rental, a negative cashflow can actually be helpful on your taxes, you just need to be able to afford it from a cashflow perspective.

[Martin]

Sell current home. Buy a 3-4 family home. Collect rent. Buy another in 2ish years.

Repeat then buy a home for yourself.

[Christina]

It it were me, none of the above. If I have to borrow the down payment, I cannot afford to play landlord.

[Jule]

None of the above.
Wait until you have e ouch for the downplaying AND can sustain paying for the mortgage if the second home without renters to avoid defaulting if your tenants fall short on paying or longer vacancies.

[Suzi]

The banks will still want to see enough savings for you to pay at least 3 months payments for your current home and the new one.

They are all about what ifs.

What if you get laid off, what if you don’t have a renter, etc.

It also doesn’t hurt to talk to a lender.

Start with your own bank. They can answer all of your questions and help you lay out a plan.

[Author]

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