Did you pay cash when the housing market crashed?
When the housing market crashed, debt markets froze. Lenders were underwriting loans at a snails pace. If you were trying to buy a condominium shortly after the housing market crashed and you wanted financing, you likely weren't getting it. Banks were petrified to lend in South Florida. Lending in a condominium, which at the time were experiencing unheard of levels of HOA delinquencies, was essentially shut down. One of the story lines behind the South Florida housing market recovery was, and still is, the all cash buyer.
Times have changed. It's very common for my buyers to put 25%-30% as a down payment, and finance the remainder of the purchase. Underwriting requirements have loosened, HOA's have much less delinquency, and banks are ready to lend again. However, I'm not sure everyone is aware of this fact. Let me be perfectly blunt, there are still sellers (or agents representing sellers) that will only take cash contracts. They still fear that the buyer will not be able to obtain financing, even with a large down payment. That fear left my mind 6-8 months ago.
If you bought a condo in Fort Lauderdale after the housing market crashed, and you paid cash, you have the option of a cash out refinance! You now have the ability to pull cash out of one property, and use that cash as a down payment to buy another property! I'm not, by any means, suggesting you over leverage yourself. You only mortgage an amount that will leave you cash flow neutral on your existing property, and allow you to be cash flow neutral on the new purchase. You're going to put yourself into a position where tenants pays down the mortgages for you. What you can't allow for is a monthly rent loss in this strategy. That's when you're pulling money out of your pocket monthly to pay the shortfall between income and expenses.
If you bought an investment property for all cash and would like to purchase another property, let's talk about strategy!
I work as a Realtor in Southeast Fort Lauderdale. If you’re interested in buying or selling a home, condominium, or townhouse (townhome) in: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Sailboat Bend, Tarpon River, Croissant Park, Collee Hammock, Wilton Manors, Poinsettia Heights, Coral Ridge, or Las Olas Isles, please feel free to contact me at (786)443-7203 or through my email firstname.lastname@example.org. I am a Realtor that works on Saturdays in order to accommodate those with busy schedules.
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Written By Casey Prindle