Real Estate Question. I want to buy two houses.?
Wednesday, 2. June 2010
When I turn 23 I am going to get my Masters degree in Physician Assistant. When I do, I plan on taking out a 200-250k Home Equity Loan on my parent’s house so that I would use 100-125k on two downpayments on two different 2 family houses. And My parents would allow that because I would pay all the interest over however many years. Then I would rent out all the portions on the houses so that it could be used on the mortgage for the two houses, I would also use my own money to pay any mortgage which wouldn’t be payed off if I wouldn’t have 1 portion rented because its impossible to have every portion rented all the time. Then after 10 years I would sell both the houses and probably get around 300k on both houses. At the same would I would save 2k a month using my own salary because PA Surgeons make a lot of $$(about 100-140k a year). Then i would have about 700-800k saved after 10 years and then I would buy a big house and use a 15 year mortgage. Do you think this plan will work out for me? Any other advice? Thanks.
loanmasterone Says:
The part that get me is when you would mortgage your parents home to get the down payment to purchase the two houses. That is bad business. You indicated you would pay the interest, who would pay the principal each month.
That is a bad plan to depend on other people to mortgage their home, too many bad things could happen.
You might consider a FHA mortgage loan to purchase a 4 unit. FHA and conventional lenders consider 1-4 units the same as a single family home for the purpose of purchasing a property. A FHA mortgage normally require a down payment of approximately 3%-5% down. The only requirement is that you have to reside in one of the units. The other three units would help you in paying the monthly mortgage payment.
You could stay in one of the unit for a minimum of 2-3 years, after which you could rent the unit you stay in. By then the rent ceiling should have reached or exceeded your monthly mortgage payment.
You could purchase another 1-4 unit and do the same thing again, thus building you a retirement fund through real estate rentals.
Under this plan you would be able to reap the tax benefits that goes with the mortgage interest, repair of the property, property depreciation and any other tax benefits you might be entitled to.
After 10 years you could make a decision as to if you wanted to sell the property, exchange the property under 1031 or keep the property.
You might consider speaking with your investment adviser about a self directed Roth IRA account.
For tax and legal matters you should always contact your tax consultant and attorney.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"
Bunny D. Says:
Please read and reread Lone Master One’s great answer………..Your plan is great on paper.
However, I also would not mortgage someone else’s home to pursue my dream on paper. Dreams on paper do not always….how such I say…..flop that way……………..I wish you the absolute very best with your dreams. You can do it. I would think you need to do it on your own where you take the
financial responsibility. Good luck.
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