I am going to post some thought in random order, coming from a Mortgage Guy.....
HELOC's are great, if you use them correctly in a stable rate market. We are NOT in a stable rate market. The Feds will continue to increase the Fed Funds Rate which directly effects the PRIME INDEX, which most HELOC's are paired to. PRIME plus/minus lending/bank margin equals your current interest rate. Expect your HELOC rate's (if not fixed) to increase another 1.50% - 3% in the next 18 months. HELOC interest is deductible when funds are used for improving your property, blah blah, blah. I am not a tax expert nor pretend to be. Consult a tax professional!!
Paid off property. Awesome, I am jealous. No bank coming for your property, but it won't stop the gubermnt from coming to your door if you are delinquent on taxes. In fact, there may be some examples of tax foreclosures being accelerated against non-mortgaged properties in the 2000's after the crash..... I have helped MANY wealthy/savy property investors who DID NOT NEED a mortgage, get a mortgage on Free & Clear property for a few reasons. 1. Mortgage money is still cheap, and they can use it to their advantage in other investments. 2. They would rather have a small mortgage with an escrow account to ensure that the HOI and Taxes WILL ALWAYS be paid in difficult times or unexpected memory lapses. The mortgage servicer will ALWAYS pay your insurance and taxes to PROTECT THEIR INVESTMENT. Yes, they will come back to you for the money and may/will increase your escrow payment, but you will always have HOI and taxes paid to the gubermnt!
Statistically speaking, the cost of homes continue to rise over time. And with the U.S. history of inflation continuing to rise fueled by the never-ending printing by the Feds, it will require more of our FIAT currency to pay the bills. But, when you get a FIXED rate mortgage, your Principal and Interest portion of your loan are FIXED, regardless if the rest of our expenses (fuel, food, utilities, etc) continue to rise. We may find that the utilities to keep food prepared and internal temperatures at a moderate level may increase beyond the Principal/Interest portion of your housing costs (Hope this never happens).
Taking cash for your asset is great in theory, but what other investment vehicle would you place this cash in, that would grow more securely than Real Estate during these times of hyper-inflation? Long-term food (as insurance), Gold/Silver, Ammo???? But what else? When you have that much cash sitting, you risk watching it continue to decline while sitting in a traditional bank/investment account. Stock market...... maybe when it hits bottom, but I do not think we are there yet.
Rental Property....... when there is blood in the streets, buy real estate!! People will ALWAYS need a place to live and they will pay gobs of money to do it, regardless of the current financial circumstance. Those who can, will. Yes, value goes up and down. Houses need repairs and phone calls at 2am for a clogged sink are annoying. Pay to have the property professionally managed.
These are just my thoughts and I am not interested in a philosophical debate regarding my opinions. Just sharing and whether we agree or disagree, I wish the best to all of us during these trying times.
As for me..... I just accepted an offer for my home. Bought a new dually and 5th wheel. My wife and I decided to exit the Rat Race, home school the kids and travel the US for a year or two, or until we get tired of it. We are very fortunate that we can continue to work from anywhere in the country as long as we have cell service.
HELOC's are great, if you use them correctly in a stable rate market. We are NOT in a stable rate market. The Feds will continue to increase the Fed Funds Rate which directly effects the PRIME INDEX, which most HELOC's are paired to. PRIME plus/minus lending/bank margin equals your current interest rate. Expect your HELOC rate's (if not fixed) to increase another 1.50% - 3% in the next 18 months. HELOC interest is deductible when funds are used for improving your property, blah blah, blah. I am not a tax expert nor pretend to be. Consult a tax professional!!
Paid off property. Awesome, I am jealous. No bank coming for your property, but it won't stop the gubermnt from coming to your door if you are delinquent on taxes. In fact, there may be some examples of tax foreclosures being accelerated against non-mortgaged properties in the 2000's after the crash..... I have helped MANY wealthy/savy property investors who DID NOT NEED a mortgage, get a mortgage on Free & Clear property for a few reasons. 1. Mortgage money is still cheap, and they can use it to their advantage in other investments. 2. They would rather have a small mortgage with an escrow account to ensure that the HOI and Taxes WILL ALWAYS be paid in difficult times or unexpected memory lapses. The mortgage servicer will ALWAYS pay your insurance and taxes to PROTECT THEIR INVESTMENT. Yes, they will come back to you for the money and may/will increase your escrow payment, but you will always have HOI and taxes paid to the gubermnt!
Statistically speaking, the cost of homes continue to rise over time. And with the U.S. history of inflation continuing to rise fueled by the never-ending printing by the Feds, it will require more of our FIAT currency to pay the bills. But, when you get a FIXED rate mortgage, your Principal and Interest portion of your loan are FIXED, regardless if the rest of our expenses (fuel, food, utilities, etc) continue to rise. We may find that the utilities to keep food prepared and internal temperatures at a moderate level may increase beyond the Principal/Interest portion of your housing costs (Hope this never happens).
Taking cash for your asset is great in theory, but what other investment vehicle would you place this cash in, that would grow more securely than Real Estate during these times of hyper-inflation? Long-term food (as insurance), Gold/Silver, Ammo???? But what else? When you have that much cash sitting, you risk watching it continue to decline while sitting in a traditional bank/investment account. Stock market...... maybe when it hits bottom, but I do not think we are there yet.
Rental Property....... when there is blood in the streets, buy real estate!! People will ALWAYS need a place to live and they will pay gobs of money to do it, regardless of the current financial circumstance. Those who can, will. Yes, value goes up and down. Houses need repairs and phone calls at 2am for a clogged sink are annoying. Pay to have the property professionally managed.
These are just my thoughts and I am not interested in a philosophical debate regarding my opinions. Just sharing and whether we agree or disagree, I wish the best to all of us during these trying times.
As for me..... I just accepted an offer for my home. Bought a new dually and 5th wheel. My wife and I decided to exit the Rat Race, home school the kids and travel the US for a year or two, or until we get tired of it. We are very fortunate that we can continue to work from anywhere in the country as long as we have cell service.
