[zx10guy]

Originally Posted by RelaxIN2

Hey guys... kind of along this thought process, I want to get your opinion on something from an investment strategy.

I currently own my home, I have no debt with the exception of my cable bill (which I will soon be cutting the cord on that too)... My house, cars, motorcycles, etc is all paid in full. I currently have a HELOC available credit line of $140k at prime plus 0. The HELOC is set to expire in 3/2022...

Originally I wanted to use the HELOC line to invest in some flips as I have in the past, however, given the state of the housing market, and the limited funds of $140k for 12 months, I'm re-thinking my options and possibly closing out the existing HELOC and applying for another line of credit.

The reason being is because... Now the house is paid for, (where it wasn't when I initially open the HELOC) and, the house is worth more because of the housing market at this time.

My goal this year is to significantly invest 2/3rds of my cash into some type of investments.

Let me know your thoughts on the HELOC idea...? Thanks guys..

I've actually thought about doing this last year. Ended up chickening out. Just don't like the idea of putting my home at risk. Although in hindsight I would have made out pretty well last year.

[RelaxIN2]

Originally Posted by zx10guy

I've actually thought about doing this last year. Ended up chickening out. Just don't like the idea of putting my home at risk. Although in hindsight I would have made out pretty well last year.

I'm sorry... thought about doing what last year...? Having your house re-assessed, or, using the HELOC for an investment strategy...?

So far, I've never had an issue or put myself in a position where I could get hurt. I've used my HELOC for Hard Money lending, small startup business, Stocks and two real estate flips. I just build the interest back into the loan or investment. What I'm trying to do now is put myself in a position where I have more to invest.

[vreihen16]

Originally Posted by RelaxIN2

Let me know your thoughts on the HELOC idea...? Thanks guys..

If you're going to open a new line, this is probably the peak home value for scoring the largest HELOC amount. Just my $0.02, from someone who opened a HELOC a few months ago to fund the construction of our retirement house.....

[RelaxIN2]

Originally Posted by vreihen16

If you're going to open a new line, this is probably the peak home value for scoring the largest HELOC amount. Just my $0.02, from someone who opened a HELOC a few months ago to fund the construction of our retirement house.....

That's my thought as well... I'm just trying to make sure that I'm not missing any caveats that I might be overlooking. honestly, it seems like a no-brainer..

I'm curious to see what the going rate is as well. I know it will depend on income, credit score, etc...

[Gregrobin]

Originally Posted by RelaxIN2

Hey guys... kind of along this thought process, I want to get your opinion on something from an investment strategy.

I currently own my home, I have no debt with the exception of my cable bill (which I will soon be cutting the cord on that too)... My house, cars, motorcycles, etc is all paid in full. I currently have a HELOC available credit line of $140k at prime plus 0. The HELOC is set to expire in 3/2022...

Originally I wanted to use the HELOC line to invest in some flips as I have in the past, however, given the state of the housing market, and the limited funds of $140k for 12 months, I'm re-thinking my options and possibly closing out the existing HELOC and applying for another line of credit.

The reason being is because... Now the house is paid for, (where it wasn't when I initially open the HELOC) and, the house is worth more because of the housing market at this time.

My goal this year is to significantly invest 2/3rds of my cash into some type of investments.

Let me know your thoughts on the HELOC idea...? Thanks guys..

I opened a HELOC recently when I thought I was going to making a large purchase versus using cash. Cash to me right now is king, so I think a HELOC in your circumstances, which are almost identical to mine, makes sense.

[zx10guy]

Originally Posted by RelaxIN2

I'm sorry... thought about doing what last year...? Having your house re-assessed, or, using the HELOC for an investment strategy...?

So far, I've never had an issue or put myself in a position where I could get hurt. I've used my HELOC for Hard Money lending, small startup business, Stocks and two real estate flips. I just build the interest back into the loan or investment. What I'm trying to do now is put myself in a position where I have more to invest.

Taking money out of my house through the HELOC to invest in the market.

[RelaxIN2]

Originally Posted by zx10guy

Taking money out of my house through the HELOC to invest in the market.

ahhh... Yes, I've done that as well. If you are doing the trading yourself and your concerned, you can always put in an automatic sell at a certain % or $$ amount. The think you have to think about is... building in the interest rate and taxes.

Originally Posted by Gregrobin

I opened a HELOC recently when I thought I was going to making a large purchase versus using cash. Cash to me right now is king, so I think a HELOC in your circumstances, which are almost identical to mine, makes sense.

Oh, dont get me wrong, Cash is king to me as well, but there is only so much cash that you need for a safety net IMO. The one concern I have about the HELOC is.. I wonder if they will let me close it out right away and then open up another one, or, is there a grace period that I need to fall within.. that I'm not sure about.

[zx10guy]

Originally Posted by RelaxIN2

ahhh... Yes, I've done that as well. If you are doing the trading yourself and your concerned, you can always put in an automatic sell at a certain % or $$ amount. The think you have to think about is... building in the interest rate and taxes.

Yep. Just couldn't get myself into assuming the risk. No matter how much it logically would make sense. Especially since the interest rate on my HELOC is 2.74% currently.

[hellrotm]

Well they just extended mortgage forbearance through Sept. Rental moratorium is through end of July. So eviction notices have been delayed. Not sure how long they can keep extending it. I don’t think we have even begun to see what will happen. A correction is coming, everyone is just arguing at what magnitude. If rental property owners can start evicting tenants starting Aug 1st, we should see an influx of inventory. Rental property owners will want to cash in on current market prices and not get stuck in the same situation if another shut down happens. Keep in mind some states have implemented longer rental moratoriums, for instance NY and CA. NY is through Aug and Cali is through Sept. Landlords are burnt out by non paying renters, they chomping at the bit to evict and sell quick. I would bet a lot of these homes will go up as quick as possible, no fixes…evict and flip.

[RelaxIN2]

Originally Posted by zx10guy

Yep. Just couldn't get myself into assuming the risk. No matter how much it logically would make sense. Especially since the interest rate on my HELOC is 2.74% currently.

Then all you can do is learn from your decision. Notice that I didn't say "Mistake" or that would imply that you did something that you shouldn't have.

Hell... there's a ton of investment opportunities that you can take advantage of, that will yield better than 2.7%. If you've ever heard the term, "Paralysis by analysis" then you know what I'm referring to. Trust me, myself and other do the same thing..!

Do your homework and trust and commit to your decision... no too many loans are there at 2.7%...

[kscarrol]

Originally Posted by RelaxIN2

Do your homework and trust and commit to your decision... no too many loans are there at 2.7%...

Agreed, closing on a second home next week and our broker gave us a line of credit for the full purchase price plus more at a quoted 2.07%. The rate will be locked in next week when we actually draw on the line at closing. With the recent move in the rates the final rate will be closer to 2%. Already deployed cash that easily covers the interest and we will repay the loan in a year or so when we sell our current house and move.

[hellrotm]

Originally Posted by hellrotm

Well they just extended mortgage forbearance through Sept. Rental moratorium is through end of July. So eviction notices have been delayed. Not sure how long they can keep extending it. I don’t think we have even begun to see what will happen. A correction is coming, everyone is just arguing at what magnitude. If rental property owners can start evicting tenants starting Aug 1st, we should see an influx of inventory. Rental property owners will want to cash in on current market prices and not get stuck in the same situation if another shut down happens. Keep in mind some states have implemented longer rental moratoriums, for instance NY and CA. NY is through Aug and Cali is through Sept. Landlords are burnt out by non paying renters, they chomping at the bit to evict and sell quick. I would bet a lot of these homes will go up as quick as possible, no fixes…evict and flip.

To piggyback on this. I read an article that said 14.7% of 7.6 million FHA mortgages are delinquent. Of those, 10.5% are 90 days or more past due. Those numbers include mortgage forbearance. The larger cities have the more concentrated amount of FHA borrowers. When forbearance ends, those cities will see an increase in supply in addition to the landlords selling their freshly evicted properties. Top cites right now with delinquent FHA loans are Atlanta, Houston, Chicago, Dallas, DC. Question is, where does home prices sit when rentals and delinquent mortgage inventory settles into the market.

[iamwingman]

I’m in south Florida. The prices of things down here have shot up 30-40% in six months. I bought a temporary place about 2 years ago. I need more space now and I can’t buy anything here because of the outlandish prices. It’s not that I can’t afford, it’s that the stuff for sale just plain ain’t worth it to me. Whoever are paying these prices are nuts. The nicer stuff has increased even more. People are flipping places they bought in December and January for 1.5 million and selling them for 3. It’s downright silly. I’m actually leaving Florida because of this. If the market holds up at these prices for a few years, then I guess that’s the new normal and maybe I’ll come back and buy then. But I can’t do it now.

[zx10guy]

Originally Posted by RelaxIN2

Then all you can do is learn from your decision. Notice that I didn't say "Mistake" or that would imply that you did something that you shouldn't have.

Hell... there's a ton of investment opportunities that you can take advantage of, that will yield better than 2.7%. If you've ever heard the term, "Paralysis by analysis" then you know what I'm referring to. Trust me, myself and other do the same thing..!

Do your homework and trust and commit to your decision... no too many loans are there at 2.7%...

Yep. Totally agree. And yes, I fell victim to paralysis by analysis. Kept analyzing things and ended up talking myself out of it even though my gut said to go for it. And yes, I'm kicking myself for not taking the plunge as I normally am an aggressive investor.

Am I screwed that I didn't do this, no. But I could have been better off for sure.

[RelaxIN2]

Originally Posted by zx10guy

Yep. Totally agree. And yes, I feel victim to paralysis by analysis. Kept analyzing things and ended up talking myself out of it even though my gut said to go for it. And yes, I'm kicking myself for not taking the plunge as I normally am an aggressive investor.

Am I screwed that I didn't do this, no. But I could have been better off for sure.

You have to look at it this way... that was Yesterdays decision... turn the page and move on to the next opportunity... do you research (within a realistic time) and act on it..

I'll share a quick story that the wife and I do... for years we would go out to eat and wait and wait for a table to open up... then I got fed up with wasting time waiting to eat like a herd of cattle. now when we go out (depending on the time of day and how hungry we are).. if there is a line I'll ask her what OUR wait time is... if the wait time for a table is longer than that we leave... no questions asked..

Both of my parents did well, but were not financially savvy when it came time for investments... Hell... they had me get freakin life insurance at 22 for crying outloud. If I knew then what I know now and invested that monthly payment in stocks or housing, we wouldn't be having this conversation... Unfortunately, the schools today still teach us how to work for someone for a living and very little on thinking outside of the box.

A good book to read... Rich Dad Poor Dad..!!

[chassis]

People in my circle with UHNW have mortgaged their principal dwelling for the specific purpose of investing in the equity market. These people have income and net worth to squash a mortgage like a bug if needed. It’s simply a reallocation of capital to take advantage of the stock market.

Whether it’s flips, rentals or stocks, taking money out of principal dwelling RE for investing is being done and has been done by many people.

[zx10guy]

Originally Posted by RelaxIN2

You have to look at it this way... that was Yesterdays decision... turn the page and move on to the next opportunity... do you research (within a realistic time) and act on it..

I'll share a quick story that the wife and I do... for years we would go out to eat and wait and wait for a table to open up... then I got fed up with wasting time waiting to eat like a herd of cattle. now when we go out (depending on the time of day and how hungry we are).. if there is a line I'll ask her what OUR wait time is... if the wait time for a table is longer than that we leave... no questions asked..

Both of my parents did well, but were not financially savvy when it came time for investments... Hell... they had me get freakin life insurance at 22 for crying outloud. If I knew then what I know now and invested that monthly payment in stocks or housing, we wouldn't be having this conversation... Unfortunately, the schools today still teach us how to work for someone for a living and very little on thinking outside of the box.

A good book to read... Rich Dad Poor Dad..!!

Originally Posted by chassis

People in my circle with UHNW have mortgaged their principal dwelling for the specific purpose of investing in the equity market. These people have income and net worth to squash a mortgage like a bug if needed. It’s simply a reallocation of capital to take advantage of the stock market.

Whether it’s flips, rentals or stocks, taking money out of principal dwelling RE for investing is being done and has been done by many people.

Yes. Lessons learned. Hence why I haven't paid off the mortgages on either property as it's cheap money and any extra money I would have put into principle payments have gone into investing.

One thing that caused me hesitation with using the equity in my home to invest last year was coming off of a fresh divorce. Had all sorts of things going on in terms of financial transactions that clouded my judgement.

As a side note on life insurance, I agree 22 is too young but I sure wish I had paid into life insurance prior to my cancer diagnosis. I had no risk factors nor bad lifestyle habits but got hit with cancer. Other than employer supplied insurance that doesn't require a medical pre-screen, I'm pretty much screwed in getting any coverage. But it was important when I was married. Now not so much as I don't have to care about a wife. My daughter is set up though with my estate and will be well taken care of.

[TrevorM3]

they need to cut those rental eviction moratoriums out, bullshit at this point.

[ASAP]

What would help with this crisis... is for any house you don't live in... i.e. let's say on your 3rd property and above, your real estate taxes should go up massively. Same for foreign investors... investing in housing needs to be discouraged because all it's doing is throwing us in deeper and deeper.

Then yeah, I agree drop the moratoriums and the fed needs to immediately start raising rates... once all that happens, the market will slowly level out as supplies will go down and building will start back up.

[paquet]

Two primary anchors of the government’s COVID protection package are ending or have recently ended. Starting Monday Sep 6, an estimated 8.9 million people will lose all unemployment benefits. A federal eviction moratorium already has expired.

[RickFLM4]

Originally Posted by ASAP

What would help with this crisis... is for any house you don't live in... i.e. let's say on your 3rd property and above, your real estate taxes should go up massively. Same for foreign investors... investing in housing needs to be discouraged because all it's doing is throwing us in deeper and deeper.

Then yeah, I agree drop the moratoriums and the fed needs to immediately start raising rates... once all that happens, the market will slowly level out as supplies will go down and building will start back up.

Wouldn’t that just increase rents further to cover the higher taxes?

[NorCalAthlete]

I feel like I'd rather have a rolling / flexible limitation on where / what markets were available to foreign investors.

That would help alleviate some of the pressures on SF, Palo Alto, San Jose, NYC, etc while boosting growth in slower / lower markets.

I dunno just a thought but the majority of foreign investors tend to aim for the big wealthy cities that already struggle with housing, exacerbating the problem.

So maybe a % of available housing for a given city and then once that % is hit, no more foreign investors - go find another city to buy up properties in.

I dunno just spitballing here.