Re: Home, Home on the Range? - Posted by Bud Branstetter
Posted by Bud Branstetter on November 18, 1998 at 11:58:35:
The next wall that you will hit is that banks want you to have no more than 4 conforming loans(like FHA 3% down). There are ways around that but it costs more down(non-conforming) and/or interest.
Then there is a more current stategy if you like moving every two years. Buy undermarket, update as needed, and sell at the end of the two years for FMV. With the new law the gain is tax free each time.
I am not a fan of buy and hold, especially when you are on the hook for the loans. Ask yourself what cash return are you getting on the equity you have in those properties. Example: SFR with FMV 70K, mortgage of 50K at $500/mo, rents at 700/mo. You have $200x12mo/20,000 equity. That works out to only 12% return. What could you do with $20K tax free to invest.