I don’t know what to do with a $75k loan.

[flaster]

First of all, no, I haven’t taken out any money yet. I was following the advice posted on this GOLD thread. I made calls to a real estate agent, and a mortgage broker.

The latter told me I qualified for $75k, mainly because, I make little money.

The first thing that came to my mind was “find something else”, but I need to know here if $75k is remotely workable. If not, back to the drawing board for me.

 

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[Stargazer]

If you are talking to a mortgage broker then surely that provisional figure is based on you purchasing a property. ie The $75k is the maximum mortgage you can get.

Whether that was workable for you would depend on the location you are thinking of buying/investing.

Dan

 

[amp0193]

but I need to know here if $75k is remotely workable

Then don't take the loan.

If you don't know specifically what you need and what you need it for, then you shouldn't be borrowing money.

 

[ZackerySprague]

Then don't take the loan.

If you don't know specifically what you need and what you need it for, then you shouldn't be borrowing money.

Agreed.

 

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[flaster]

Then don't take the loan.

If you don't know specifically what you need and what you need it for, then you shouldn't be borrowing money.

Point taken. I realize now this was a foolish question to ask.

 

[amp0193]

Point taken. I realize now this was a foolish question to ask.

If you didn't ask the question, you might have taken the loan.

So maybe not so foolish.

Wish I had asked that question instead of taking on debt I didn't need (and learning the lesson the hard way).

 

[Kak]

With only a 75k property, I would consider just buying a lot somewhere as popular as you can get for the money and just auto draft pay the loan every month. Forget you ever made the money.

In a few years sell it and do it again.

It's too small to try to create an active investment out of. No one wants to collect rent that nets 100 bucks a month.

Either that, or just bag it and work on your income.

 

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[flaster]

With only a 75k property, I would consider just buying a lot somewhere as popular as you can get for the money and just auto draft pay the loan every month. Forget you ever made the money.

In a few years sell it and do it again.

It's too small to try to create an active investment out of. No one wants to collect rent that nets 100 bucks a month.

Either that, or just bag it and work on your income.

Ok, that makes sense, since land is always in demand. I think I can talk to my real estate agent about that.

You say sell it in a few years; I guess that means the land will appreciate in time? In that case, I guess 3-4 years would make a good minimum?

 

[Johnny boy]

If your income isn’t 100k a year what the F*ck are you doing worrying about this trash

 

[Red]

Ok, that makes sense, since land is always in demand. I think I can talk to my real estate agent about that.

You say sell it in a few years; I guess that means the land will appreciate in time? In that case, I guess 3-4 years would make a good minimum?

Land is not always in demand. Areas vary greatly & even an in demand area is not necessarily a good investment.

The land that I built my home on I bought from the original purchaser at an 80% loss, about 10 years after they purchased it. Even after today's covid real estate boom and inflation pricing, the land might be worth half of what they paid well over 15 years ago.

As others have said, if you're unsure about what to do with taking on a loan, it sounds wise not to do so until you have a little more understanding of the investment you want to make.

 

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[Kak]

Ok, that makes sense, since land is always in demand. I think I can talk to my real estate agent about that.

You say sell it in a few years; I guess that means the land will appreciate in time? In that case, I guess 3-4 years would make a good minimum?

Generally speaking it does. There are absolutely exceptions and people that lose money on land.

My advice is if you really feel hell bent on doing something with that loan, this is an option to carefully consider.

Run all the numbers. It needs to appreciate faster than your interest rate + property taxes.

Getting an active investment, like a rental property, with a 75k loan is going to leave you with razor thin monthly margins if any margins at all. One stupid problem with the AC or roof and your returns are bombed for a year. And it will produce a bunch of work for you.

The reason I think this way is because my business is my primary driver of accumulation. A piece of land just sits there. It's just something you own. You don't have to insure it because nothing will happen to it. You don't have to power it. You don't have to paint it. You don't have to ready it for turns. You don't have to collect rent from it. You don't have to maintain it. You don't have to nervously open a statement from Charles Schwab every month to see just how screwed over you got in the latest dumb money downturn. Just own it and not think about it and one day you'll hopefully be glad you bought it. Sure it makes less money because it isn't actively doing anything, but business is more important anyway.

It makes more sense with cash than a loan though because of that pesky interest rate. In any case, a 75k loan at 7 percent is less than $500 a month. Just come to terms with paying that every month. You can refinance when the government decides they can't afford high interest rates and just lowers them again, also putting upward pressure on real estate values.