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Asked by Eric, Huseby Fri Feb 13, 2009

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Answers

10
., , Denver, CO
Mon Feb 16, 2009
Hi Eric,

When I read your question, I assumed you were interested in purchasing a condo that you could use and rent out as a vacation rental, rather than a permanent rental. In my neck of the woods, vacation rental companies charge about 30% for their services vs; 10% for permanent rentals.

As a loan officer, I see comparable rates to loans for investment properties and 2nd homes, with the single difference being that the points on the loan are higher for investment properties which you can mitigate with a larger down payment.

If you care about your tax deduction, you need to ask your accountant about "Aquisition Indebtedness". As it turns out, the interest deduction you are allowed has to do with aquisition indebtedness. Aquisition indebtedness is the lowest you've paid your mortgage down to - in your case down to 0, plus the amount you can prove you spent on rennovations, plus $100,000. So if you haven't spent anything on improvements for your TX house the maximum interest payment you can legally deduct would be the interest paid on up to $100K in new debt. If you need more than that to buy the place in SD, you should definitely think about financing it.

Carol
Web Reference:  http://www.CarolNeu.com
0 votes
Nick Rhea, , San Diego County, CA
Mon Feb 16, 2009
Hello Eric,

Please reach out to me If you still have questions about maximizing your financial resources and investing in San Diego real estate. We specialize in working with local and non-local real estate investors.

Nick Rhea, MBA, Broker
Bombora Investments, Inc
nick@bomborainvestments.com
619-886-2004
0 votes
Eric, Home Buyer, Huseby
Sun Feb 15, 2009
Thanks to all for taking the time to answer, and the insight you've shared. It will be very helpful in the weeks ahead. We're visiting our CPA this week and should have a clear idea where we're heading in the next week or two.
0 votes
Joe Mendoza, Agent, San Marcos, CA
Sat Feb 14, 2009
Hi Eric!
First off, CONGRATULATIONS! You are one of the proud few to accomplish such a milestone! Secondly, I would like to know more on your long term strategy. This is important because in a market as such, you may not want to stop at one, especially in San Diego! It's been years since we had a market like this and many "baby boomers" are considering coming back as a permanent stay. There are also tons of investors looking at capitalizing.

I offer full service real estate, from brokerage, property management, and mortgage. Sounds like you definitely have your act together and may leverage that 10-fold. Lending - you can shop rates maybe even do 5-10% down if you are looking at this as your primary home. We should definitely talk. Do you have money tied up in a "self-directed" IRA? This is an excellent way to purchase property and build MORE wealth. Sooooo many options for you!

Property management does vary across the board 8-10% is the norm.

Feel free to visit my website and I would love the opportunity to help you!

Sincerely,
Joe Mendoza, Broker
Top 1% Nationwide
"Who's Who In Real Estate"
http://www.JoeMendoza.com
Web Reference:  http://www.JoeMendoza.com
0 votes
Becky Bensus…, , San Diego, CA
Sat Feb 14, 2009
Eric, I hate the idea of re-mortgaging your free and clear property. It is your primary residence and if you own it free and clear why risk it. The interest rates for investment property are not high at all. The last time I checked a few days ago was 5.875% fixed-30 years. I don't know if you will be renting out your vacation home the full year or you are planning to occupy the condo a few months of the year. As other Realtors and Loan Officers have pointed out, you can get an equity line of credit in your primary residence in Texas as low as 3.25%. Of course, this is an adjustable loan and it can go up if the prime rate goes up. My recommendation is that you should talk to your accountant and see your tax benefits on both situations. If you borrow on your primary residence your interest will be deductible. In a vacation home that might be rented part time your accountant is best suited to answer that question. As for vacation rental management fees, it varies but not that much. Have you given any thoughts to where would you like to buy? You can go to our website and check for condominiums all over San Diego and if we can help you out we would be very happy.
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Robert Chome…, , San Diego, CA
Sat Feb 14, 2009
You can take an equity loan on your current house at a prime rate...3.25% (or possibly less) and use that to purchase the property "cash". But keep in mind equity lines are adjustable loans. There would also be less closing costs if you used an equity line on your primary to purchase and you could close very fast. You could then always refinance at some point into a 30 year fixed.

Alternatively, you can go 20% down and get a 30 year fixed and buy the condo as a "2nd home".
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Jacqueline W…, Agent, Irvine, CA
Sat Feb 14, 2009
I recommend you first visit a direct lender, Jennie Norris at Bank of America as done a great job for a number of my clients. You can reach her at 949-292-0420. If you prefer on-line services, QuickenLoans (a direct lender) has also been great to work with.

Fees for property management companies range from 7%-12%, depending upon the size of the company and the services you will require. I have two investors in Chicago who use a large company to manage their SoCal portfolio and the fees are 10% and I have another local investor with two triplexes in the North Park area of SD who uses a mother and daughter team who charge 7% and do a great job.
0 votes
Melissa Ande…, Agent, Del Mar, CA
Fri Feb 13, 2009
Generally, rental fees for management is 11% of the lease amount. Todays mortgage guidelines usually require you qualify for both house payments. However, In your case you own your home outright so your home would put you in a strong position as collateral. Once I understand your exact status, I can provide more accurate details. There are some phenominal deals in San Diego. Being a Realtor and Loan officer, I have the freedom to provide you the best service in creating your ideal plan. Feel free to email me for any further discussion. I have been in San Diego over 30 years and have an excellent reputation matching the right environment for your preferences. Melissa Anderkin at windsor Capital - askmel@cox.net
0 votes
Jeffrey Doug…, , San Diego, CA
Fri Feb 13, 2009
Dear Eric,

If you are going to borrow money for a non-owner occupied property both the down payment and interest rate will probably be more and higher. You may want to consider taking the money out on your property at a lower interest rate, but the disadvantage would be that you now have debt on your principle residence.

Advantages both directions but I would speak to a good lender that deals with non-owner occupied investment properties.

Property management companies typically charge a percentage of the lease/rent. I am not sure if you are talking about short term rentals or like a "race season" rental around the Del Mar area.

If you can give me an idea where you are looking at in San Diego I could give you some references for some excellent lenders and property management companies.
0 votes
Katrina Hami…, Agent, San Diego, CA
Fri Feb 13, 2009
Hi Eric,

The best place to start would be within your own financial institution and certainly shop rates. Everyone's bottom line and end result is different based on their financial goals. I'd be happy to help you with locating and managing your rental. Please feel free to visit my site below; it lists my services and fee for such or contact me direct with any questions.

Sincerely,
Katrina Hamilton
Direct: 858-405-4407
Web Reference:  http://www.downtownREOs.com
0 votes
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