2nd mortgage

[Tikker]

I say, if you're already mortgage free, keep collecting cash for when the market does crash.

I currently have a HELIOC & it was handy to have for emergencies, like when I fell on hard times. But looking back now I'd only use it for emergencies and not real estate during an economic crisis. I'd probably never get a HELOC unless absolutely necessary these days.

To me cash on hand goes much further and has kept me focused more on saving. I too want to take advantage of the next housing market correction when it happens. But to me, if the market is so bad that I can't get a loan with a large down payment for a rental house when I'm already mortgage free, then I shouldn't dig myself into a hole looking for treasure with a line of credit.

At least with saving cash you won't have to spend your money just to get a credit line started.

 

[basstracker89]

Lots of good thoughts. I did a home equity line for the full amount I could get. Bought 100ac of land with it. It took me 10 extra years to pay it off due to the last Democrat administration. And I had to work an extra 8yrs before I could retire. That said I don't regret it. I still have the land and my home. As long as your investing in real estate I think it's a decent investment. They're not making anymore land. The upside is as long as the debt is on your primary residence you'll get a tax wright off and you will have a better interest rate than you would get on a secondary real estate loan. Go ahead and open the account, but I definitely wouldn't take any money till you need it. The bad side is that if your house goes down in value before you take money, they may drop what you have access to. The other side is that if you have taken money and your house drops in value, they my call that margin. Of course it's always better to pay cash for things as you go. Good luck

 

[Florida_Gator09]

Some good advice in here. One thing to consider is the possibility that the housing bubble bursts around the same time as the equally inevitable stock market correction. In the event the market takes a substantial downturn, you may be better off throwing cash into it, and riding the climb back to the top. This will likely earn you a better return, faster.

My wife and I have a rental property currently, and I the only thing that makes it a better investment for us than the stock market, is the current price of the home(much higher than we paid 2 years ago).
My experience suggests that for real estate to be a truly profitable endeavor, you need several properties renting at good margins, not 1 or 2...

 

[rightway1974]

That’s the way to live right there.

I'm a little more old school but I built my house in 1999 mortgage free and have not financed a new car since my new 1972 montecarlo , yep lots of new ones since and write a check. And no, I am not rich I just take care of what I have.

 

[MorganAltavilla]

It is a huge risk and can be very stressful for most people. I wouldn't recommend you do that. Only if you have a good thought plan, but even then, it is risky to do it without consulting a specialist in this domain. By paying a trustworthy and reliable specialist, like Mortgage Broker Cambridge, you could solve your problems. Also, it will relieve you from stress and losing time and money in the future. Of course, it is better not to take any risks from the start to the end. But if you are confident in yourself, just do it, and trust your intuition in the first place.

 

[Granite3]

Based on what the industry says, close to 70% of the real estate deals are cash sales, not mortgage based.

So, property values are not going to drop like they did in 08-09.

 

[Cruisers460]

That line of credit can be gone if the market drops, Chase cut them in a heartbeat in 08.

 

[Tikker]

Most likely homes being bought with cash are from hedge funds & investors looking to capitalize on the overinflated rental rates.

I'm sure whenever the market catches back up with supply and demand, rental rates will drop causing the the market to be saturated with available home's.

I won't gamble on it, I'd rather wait for the market to correct itself and buy when things are at their worst. Probably will be orchestrated when Republicans are back in the White House so they are left having to deal with the damage democrats created.

 

[Grub Master]

I just put a rental house under contract Monday after looking hard and fast for over 60 days. We've made a lot of cash offers and were beat out every time by cash buyers. We had to offer a premium, no contingencies and close in 10 days to get the house. There were multiple cash offers. It's still a buyers market. There will not be a crash like 08. With materials as expensive they are and some hard to get, new houses will continue to cost more. They are over a million new builds behind and if you want a sub $300K new home you will wait at least 8-11 months. The days of cheater loans are far behind us and with millions of mortgages under 3% there isn't a reason for owners to walk away when apartment rents are more than their mortgage. This Joe Biden inflation will not be going away anytime soon. There might be a correction, but the prices have always rebounded. My rents did not go down in 08 and I don't expect them to go anywhere but higher in the future.

 

[NWSharpshooter]

Over 100 million houses short caused by a decade of underbuilding had created massive amounts of equity causing a massive amount of cash buyers or at least tiny mortgage buyers.

Every house in my neighborhood that has been sold in the last year has been a cash purchase and not a single one of them are from real estate investors. It’s families moving further out from the cities. Couples from Sandy springs, Roswell, Chattanooga, etc and all paying cash.


I say again, 100 million houses short and growing. There will be no bubble burst anytime soon.

The best you can hope for is stagnation of prices where while they may not drop, they slow their rise and stop going up 15 to 30% year over year.