How Do I Prepare for a Real Estate Opportunity?
Ultimately my husband and I might buy another rental property near the beach. With the real estate market in a semi-chaotic state we’re keeping our eyes peeled for bargains. The question is: how do we plan for a buying opportunity?
The first issue: we have mortgages on both our primary residence and our rental home. Our primary residence is a 15 year fixed mortgage at 4.875%, while our vacation home is a 30 year fixed at 6.00%. (I don’t know if we’ll ever see a rate below 5% again in our lifetime.) The biggest problem I see with purchasing a third home is trying to pay the mortgages on all three properties each month.
The second issue: my husband and I have invested the majority of our money, (outside of our emergency fund), in the market. We know that the DOW may very well far below it’s current marks, but most of our money will remain in the market for the long haul, so we figure we might as well invest it. If we don’t end up purchasing another property we’ll probably leave this money in the market for the next thirty years. Of course, if we do decide to purchase a third home our money may be tied up in a very unpredictable market. What if the market is down when we decide to seize an opportunity? On the other hand, what if an opportunity never arises and we our money has been sitting idle in cash and money market funds for years?
I’m wondering… What is the best way to prepare for a real estate opportunity?