HELOC Frostbite — OUCH

[EconProf]

BobS
FormerSanDiegan and Rustico: you guys get it. Radelow & meadandale need to reread my original post. It is about having the liquidity to swoop in and buy at the bottom.
The 3% differential is the cost of keeping liquid. It is not for consumption, mortgage payments, or to look at. It is to keep handy for a screamingly good investment when the bottom comes. When a desperate seller gets my purchase offer with a low-ball price, and a carbon copy of the bank cashier’s check I’ve just drawn with his name on it for the amount I am willing to pay and with a 7-day closing, no financing, then the “cash is king” rule will apply.
BTW, businesses large and small, routinely pay an annual fee to have access to a bank line of credit, just in case of emergency.

[davelj]

I kinda sorta agree with BobS on this one. IF you are dead set on buying property at some point AND you were dead set on using that HELOC money anyway, then paying a net 3% to keep it available isn’t a bad idea. After all, if prices are falling 10%-15% annually, then a 3% fee to retain your liquidity isn’t that bad a deal, right?

[davelj]

I kinda sorta agree with BobS on this one. IF you are dead set on buying property at some point AND you were dead set on using that HELOC money anyway, then paying a net 3% to keep it available isn’t a bad idea. After all, if prices are falling 10%-15% annually, then a 3% fee to retain your liquidity isn’t that bad a deal, right?

[davelj]

I kinda sorta agree with BobS on this one. IF you are dead set on buying property at some point AND you were dead set on using that HELOC money anyway, then paying a net 3% to keep it available isn’t a bad idea. After all, if prices are falling 10%-15% annually, then a 3% fee to retain your liquidity isn’t that bad a deal, right?

[davelj]

I kinda sorta agree with BobS on this one. IF you are dead set on buying property at some point AND you were dead set on using that HELOC money anyway, then paying a net 3% to keep it available isn’t a bad idea. After all, if prices are falling 10%-15% annually, then a 3% fee to retain your liquidity isn’t that bad a deal, right?

[davelj]

I kinda sorta agree with BobS on this one. IF you are dead set on buying property at some point AND you were dead set on using that HELOC money anyway, then paying a net 3% to keep it available isn’t a bad idea. After all, if prices are falling 10%-15% annually, then a 3% fee to retain your liquidity isn’t that bad a deal, right?

[meadandale]

Based on the original post, it didn’t sound like you had more than about $100k ‘liquid’. I don’t see any situation in which, even with cash, you are going to be able to buy anything for $100k even in a distressed sale.

Double or triple that and you might have a case. Of course, at that point, you are basically paying a mortgage payment on your money.

Good luck with that….

[meadandale]

Based on the original post, it didn’t sound like you had more than about $100k ‘liquid’. I don’t see any situation in which, even with cash, you are going to be able to buy anything for $100k even in a distressed sale.

Double or triple that and you might have a case. Of course, at that point, you are basically paying a mortgage payment on your money.

Good luck with that….

[meadandale]

Based on the original post, it didn’t sound like you had more than about $100k ‘liquid’. I don’t see any situation in which, even with cash, you are going to be able to buy anything for $100k even in a distressed sale.

Double or triple that and you might have a case. Of course, at that point, you are basically paying a mortgage payment on your money.

Good luck with that….

[meadandale]

Based on the original post, it didn’t sound like you had more than about $100k ‘liquid’. I don’t see any situation in which, even with cash, you are going to be able to buy anything for $100k even in a distressed sale.

Double or triple that and you might have a case. Of course, at that point, you are basically paying a mortgage payment on your money.

Good luck with that….

[meadandale]

Based on the original post, it didn’t sound like you had more than about $100k ‘liquid’. I don’t see any situation in which, even with cash, you are going to be able to buy anything for $100k even in a distressed sale.

Double or triple that and you might have a case. Of course, at that point, you are basically paying a mortgage payment on your money.

Good luck with that….

[EconProf]

BobS
meadandale: I see your point.
To clarify, the (roughly) $100k HELOC money would be added to about $150k other money, which should be enough to buy a decent rental or flip candidate at the bottom.
Once the property is fixed up, could flip it or get new first mortgage. Then…on to the next one.

[EconProf]

BobS
meadandale: I see your point.
To clarify, the (roughly) $100k HELOC money would be added to about $150k other money, which should be enough to buy a decent rental or flip candidate at the bottom.
Once the property is fixed up, could flip it or get new first mortgage. Then…on to the next one.

[EconProf]

BobS
meadandale: I see your point.
To clarify, the (roughly) $100k HELOC money would be added to about $150k other money, which should be enough to buy a decent rental or flip candidate at the bottom.
Once the property is fixed up, could flip it or get new first mortgage. Then…on to the next one.

[EconProf]

BobS
meadandale: I see your point.
To clarify, the (roughly) $100k HELOC money would be added to about $150k other money, which should be enough to buy a decent rental or flip candidate at the bottom.
Once the property is fixed up, could flip it or get new first mortgage. Then…on to the next one.

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