I own land outright. I also own a rental that has a mortgage on it. My base salary plus bonuses is $97,000 per year. My monthly debt is $2100, currently without the construction loan. Rental income is $3600, but I have a $1900 mortgage on it so that’s $1700 per month. We were told building our house would be in the $400,000s.
Does the $2100 in monthly debt include the $1900 mortgage on the rental or do you have 5 cars?
Dana said:
Does the $2100 in monthly debt include the $1900 mortgage on the rental or do you have 5 cars?
Includes the mortgage for the rental property.
How much would you take out for the house? The full 400? If you are talking about having a $4000 mortgage, it would be a little tight. Could you sell the rental and pay cash for the house?
Kendall said:
How much would you take out for the house? The full 400? If you are talking about having a $4000 mortgage, it would be a little tight. Could you sell the rental and pay cash for the house?
I don’t want to sell the rental because it’s income. Yes, it would be full $400,000. Site prep we are paying cash.
@Breck
Might be a little tight. Do you have about $4000 of leftover cash every month? I think the mortgage would be about $3500 to $4000 with taxes, insurance, and PMI.
Kendall said:
@Breck
Might be a little tight. Do you have about $4000 of leftover cash every month? I think the mortgage would be about $3500 to $4000 with taxes, insurance, and PMI.
I would have $1800 left over if it’s $4000.
@Breck
If you are disciplined and living on $1800 would be no problem, do it. Maybe try it a few months and put the $4000 into the down payment. If you are comfortable living on $1800, I don’t see any problem with it. How much would the property be worth with the house on it?
@Breck
I’m not sure where this guy is getting $4000 though. I have a $500,000 mortgage at 7% and it’s $3500.
That’s probably gonna be tight, income-wise we’re about the same as my wife makes about what you make off your rental a month, maybe a hair more. Is $97,000 gross or net? Our plan is we’ve been looking to build and have land also, a small house will be in the $400’s here with $250 square foot being the base. We’ve got two car payments and one is about done and probably gonna try and pay the other one off before we build so our expenses would be minimal. We’re gonna start in the next year or 2, it may be tight but it’s our forever house and we can live pretty cheap as the farm pays for our propane, beef and a few other things. The wife gets a pay increase each year as well.
@Lee
$97,000 is gross.
Breck said:
@Lee
$97,000 is gross.
It will be tight, but I think you can manage. Hopefully, the interest rate will eventually drop and could refinance would help too. I don’t see the cost of building getting any cheaper.
400k where and how big?
Darcy said:
400k where and how big?
2000 sq ft. In Mass
Oof that rent charge vs mortgage payment is not fun to read. So after your monthly debt and $1700, what do you have left over?
Jade said:
Oof that rent charge vs mortgage payment is not fun to read. So after your monthly debt and $1700, what do you have left over?
He makes $1700 on the rental per month.
Jade said:
Oof that rent charge vs mortgage payment is not fun to read. So after your monthly debt and $1700, what do you have left over?
That great cash flow for a rental.
If it were me I’d be paying down that mortgage. Then I’d build a house. We all have different levels of risk tolerance.