The Rueth Team - Denver's Top Mortgage Company
By Nicole Rueth - January 16, 2021
With inventory low and sellers not wanting to be displaced, our sellers trepidation is adding to an already low inventory problem. I recently shared a client story who owned their home outright but due to declining self-employed income heading into retirement could not afford both homes. Here is the solution I found.. We secured a $500,000 line of credit based on her pension/retirement income. Then put that money in her savings account and let it season for two months. After seasoning, she purchased her dream home using a Reverse Mortgage putting 50% down, listed her first home, sold it and paid off the HELOC.
I love finding a way!!
Let's go over a few other options...
Bridge Loans. Bridge loans are short term loans against the equity in your current primary. There are a few options for these with smaller portfolio banks. The bank will charge .5 to 2 points up front since they know this is a short term loan and limit you to 80% loan to value on the current home. You will then be able to use that money to put a down payment on a new home and pay off the bridge loan when you sell your existing home. Note that this option has become more limited with COVID.
By Nicole Rueth - January 2, 2021
By Nicole Rueth - December 23, 2020
By Nicole Rueth - December 7, 2020
By Nicole Rueth - November 18, 2020
Last week we talked about defining your retirement income goals using real estate investments and a big picture view of how to achieve it. Now I want to narrow the lens and look step by step on how to start to achieve those goals because everyone wants to live comfortably throughout their retirement.
First ask yourself … are you willing to move? I talk about this step a lot as it’s one of the best tips I can give to those who are staring off in real estate investing. By moving into each property, you can lock in a lower primary home interest rate and won't need to put nearly as much down, because primary homes only require 3% and have access to down payment assistance. If you don’t care to move and you purchase your property as an investment be prepared to put anywhere from 15-25% down depending on the product. But of course you save yourself the hassle of moving. Keep in mind there is no right or wrong answer and The Rueth Team has helped countless people invest, both ways.
Next is figuring out how much you can afford and what type of property you want to purchase.
If you’re currently renting and look at purchasing your first property you can likely afford more than you think! For example, if your rent is at $1,850, the top end of your home search could be around $350,000. And if you’re thinking, “I don’t have $11,000 to spend on a down payment!” It’s ok. Many people utilize CHFA or other down payment assistance programs to help them afford their first property. These systems allow you put 0% down if you qualify on a primary home. This would mean only needing to bring closing costs to the table.
Now let’s jump over to the type of property you want to invest in as there are pro’s and cons to any choice. If you’re looking into living in the property you might want to purchase a single-family home or condo, you can live in the house by yourself for the first year or you can rent out the other rooms creating cash flow right off the bat. And finding roommates isn’t the hassle it used to be. In fact because of online resources, it easier than ever to not only find people, but to help calculate the amount for to charge for each room. For example, when my sons were looking for roommates for their single-family homes, we were able to fill the rooms within 48 hours and they both either live for free or very reduced amounts.
If you don’t want roommates but you want the possibility of decreasing your own living expenses a multi-unit is your answer. Fourplexes, my preference, duplexes and triplexes are a great product, and you don’t need to qualify for the entire monthly mortage amount just using your monthly income. That’s right! You can use 75% of the projected rental amounts as income. Which means if you’re rent is around $1,800 right now you could purchase a fourplex at $750,000 and use the rental income from the other three units to pay off the mortgage. Better yet if you price it correctly the other three units could help cover the cost of the fourth, your, unit. And to sweeten the deal, you only need to place 3.5% down on the entire property going FHA or 0% down if you’re a veteran.
There are a lot of choices when it comes to investing in real estate, and there’s no one size fits all rule. You have to determine what you need from your investments and what you’re willing to do along the way. And if you come across any questions while you’re at, give me a call. Helping our clients build wealth through real estate is one of my favorite ways to provide support.
Nicole Rueth with The Rueth Team. We look forward to serving you.