Nope… it’s a win-win. He doesn’t need to sell while cashing out! Exactly what he is looking for :)! The only advantage being taken is on the banks for the locked in low interest rates and the county for prop13!
Two words: Damage Control
Sometimes, one must lose the battle to win the war. Good luck!
1 Like
Ok sound good. Count me in. I’ll split up those profits with you guys 3 ways… 
Is patchhomes for equity partnership any good ? Anybody used it ?
They’re no good. Why go through a middleman that charges you fees. Work directly with us 
1 Like
Home bought between 2008 and 2011 should be frozen as primary or rental in bay area.
Just keep renting, Forget this subject.
wuqijun’s solution to any RE issue is hold aka always a hammer.
1 Like
We need to come up with a proposal. How much cash for % of ownership?
Current value = 1.3M, monthly expense $3800, monthly cashflow = $0.
N4s really wants it haha.
Job loss will create sleeplessness, tension, stress. Have regular exercise to sleep well. Do not make any major financial decision during this period until you get stability.
Assume you will get a job in 1 to 3 months, use the existing funds (cash, 401k loan…etc) to support mortgage for 6 months.
Keeping this home will help you retire financially independent.
We can all tell you, but it is hard to undergo the stress (I went through in 2003).
Try to come out of such stress, you will be fine.
Do not go for this kind of partnership. Just hold it for 3 months, you will be fine. Not only that, you will be strong in your entire life and financially independent free when you overcome this kind of stress.
Trust me, I went through such stress…but got a job within 7 days during dot.com burst !
Are you in IT, by any chance?
Selling had a couple of motivations : 1) take 500K capital gains exemptions in a low income year.
2) pull $1M equity (loan = 500K, value = 1.5M) out of the home and invest in alternative investments that yield around 10%. Even if I assume 5% long term appreciation by keeping the house, it would be $75K on a $1M equity which is about 7.5%.
2 Likes
That’s a sound logic actually. Everyone here is an RE bull, but for a conservative take, that’s a smart move depending on your circumstances, and only you know your circumstances.
1 Like
Yes, you number freaks can dice it up a million ways but at the end of the day, can you and your family handle the stress (if you don’t sell)???
2 Likes
If you can pull 1M equity (from lender, not by other sharing) and pay off your primary home loan completely, that is more than enough.
You rental home mortgage is tax deductible while you claim standard deduction 24k. Primary home tax deduction is waste (you do not get great deductions) after last year tax changes.
I would prefer this route than investing that money.
If you were agreesive like WQJ, you would invest 1M, but that is tricky and tough. I would not suggest that route until you handled such 1M cash investments.
I assume 4% appreciation rate (safer bet) and try to see whether holding is good. In fact, market will return better than 4% in reality. This is the key for your financial independence.
That’s not enough to pay off his primary. With 8400 PITI that’s probably 1.8M with a 1.4M mortgage @ 20% down.
2 Likes
I would like to keep the leverage on my primary home, so even if I sell the rental, I would not pay off primary mortgage loan. I will try to find alternative investments with higher liquidity and lower correlation to stock market.
Got it. He is not going to get tax deduction above 750k. He can reduce it to 750k level and get full tax deduction.
If you have mortgage on rental, you get full tax deduction (whatever it may be the amount) while primary is limited to 750k.
Take 2 scenarios:
-
Max 1.4M mortgage at primary, Least mortgage at rental. Assume you hold it for 20 years and selling both.
-
Least mortgage at primary, Max mortgage at rental. Assume you hold it for 20 years and selling both.
The second case, you will pay less tax when you sell it rather than first case (as per current tax changes).
Do your home work and play it.
Cna you rent arbitrage? Works if you dont have kids. Move to a place with lower rents maybe, and rent your primary? Then you can deduct that interest too.
1 Like