Mortgage Blog

A good and saver investment?

August 12th, 2009 8:47 AM by Eric Fang

I have a client calling me to ask the following question,
she has around 50k, and and she can use it either to
purchase a rental or pay down her current mortgage and refi
to get a lower rate from 6.125% to around 5.125%(he has to
pay down to be able to refinance).He needs my opinion
about the strategy.

The first question I asked: Do you like to be a landlord?
How much do you know how to be a landlord? Do you plan to
manage the property yourself or hire a property manager?
Are you a handy person?

The reason I asked this question is that even though I am
a landlord for a long time, hired some property managers before
and manage the property myself sometimes. Though I learnt
a lot about how to be a good landlord, and I still hate it.
This investment is not for everybody, especially if
you are busy.

But the refi maybe a good idea. To bring the 470k loan to 417k
with the rate reduction of 1%. It's an average of $4000(more or less)
saving a year. With the investment of 50k, the return is
around 7% to 8%, without the hassle of tenants. Is not it
a good investment?

Posted in:General
Posted by Eric Fang on August 12th, 2009 8:47 AM



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