- April 10, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Generating Money from Property Value Appreciation
Is there a way to maximize the financial benefits of the increase in property value, aside from the sheer joy of owning a great house?
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### Property Investment Strategy
Considering the significant renovations made to bring the house up to the standard of comparable properties, is there a viable strategy to capitalize on the increased value without the intention of selling or flipping the property?
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### Financial Planning and Mortgage Management
With the costs of renovations and property taxes impacting your financial situation, are there feasible ways to improve your financial standing and potentially benefit from the increased property value?
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AI Legalese Decoder can provide insights on managing mortgage payments, tax implications, and leveraging home equity to optimize your financial situation and explore opportunities for additional income generation (double original length).
### Update: Potential Savings Opportunity
Considering additional details about personal finances and business loans, how can you take advantage of your property’s value appreciation to increase savings and financial security?
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AI Legalese Decoder can assist in evaluating the impact of different financial decisions, such as taking out a HELOC or exploring tax deductions, to optimize savings and minimize financial risk, providing you with a clear path towards financial stability and success (double original length).
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****** just grabbed a
HELOC
Yeah, you live in it, and get the benefit of living in a nicer place.
The value of comparable rent is higher, and that’s the value you derive from it every month you live there instead of renting.
You can’t eat your cake (live in it yourself) and have it too (make money off it somehow). You can use its appreciated value as collateral on a loan like a HELOC, but that isn’t “making money.”
Here’s what you might want to do:
1. Get a new appraisal for the house.
2. Set aside some space for a home office and/or home based business for tax deductions.
3. Shop around for the biggest HELOC with the best rate.
4. Arbitrage via high yield fixed income investments. Private credit, REITS, preferred shares, small cashflowing businesses, etc.
The point is to not try to get greedy and start dumping money into volatile, non-cashflowing investments. No stocks (other than REITS), no crypto.
HELOC rates are typically prime +0.25% or 0.5%. You need to balance between the amount of the loan and the rate. Ideally you want 75% loan to value or higher. At today’s rates, which is also historically reasonable, we’re talking 7.5%ish interest. Focus on mature, stable investments where capital appreciation is minimum, but capital safety is maximum, and cash flows are very stable. You want to target a minimum of 9% so you at least get 1.5% of arbitrage. Obviously there is still the risk of interest rates going up, but done right, you can typically generate 2% to 3%. A $1M house with $750K loan at 2% gets you $15,000/year that you can use to pay for property tax, water, and probably utilities as well. Essentially the house can pay for itself.
I am surprised that no one has answered smith maneuver. Leverage the equity in your house into the equity market, which generates premiums, at the cost of interest, which is usually less than the premiums.
Short example: Take out a 100K HELOC @ 6% interest. Buy 100K of enbridge. That yields 7.6% dividends. Enjoy the additional $133 per month until Enbridge declares bankruptcy, or cuts the dividend. Or your HELOC interest rate goes above yield.
The Ponzi scheme everyone else is participating in – borrow against the equity in your house to speculate on even more real estate ownership and be a landlord.
Get a room mate?
In BC you can deffer property taxes and pay them off with some straight interest at time of sale. You do need to meet some conditions. Not sure if that’s an option where you live. If it is then you can postpone your tax payments and eventually use home equity to meet that obligation.
If you get the home reappraised you can get a HELOC and access some equity that way, but the interest rate is usually not amazing so hard to say if that’s attractive to you. When you renew the mortgage if you get the home reappraised you could take out some equity and then pay it back via the mortgage at a better rate than a HELOC.
>have left us pretty house-poor. We can still make it,
As you’ve already mentioned in the comments, the interest rate on a HELOC is worse than on a mortgage.
So there’s a tradeoff here, between:
1. Taking on debt at a rate that’s less-than-optimal. (Optimal ~= mortgage. For a variety of legal, political, historical reasons, a first mortgage against a home is *just about the lowest interest rate* that you’ll ever get on a loan.)
2. Whatever else you might want to do with the money.
So I guess it comes down to: *what would you do with the freed-up cash flow*?
Everyone is talking about a HELOC but my bank suggested refinancing my mortgage at the same current fixed rate of 5.3% up to 80% of the condo’s value. They recommended this instead of HELOC because of the lower interest.
I guess the downside is I can’t pay back in one go without penalties? My bank said there are no penalties for refinancing other than $500 lawyer fees.
Also to note that this condo is an investment property with a tenant in it. There’s about 50% mortgage left as a percentage of the appraised value.
Heloc.
Get a heloc and do the smith maneuver
* HELOC
* Renting portions out
HELOC loan for another property
HELOC by far. It’s soooo valuable if you put it in the stock market.
If you decide to do both pay off your business loan and invest with the extra HELOC money, make sure you do it in 2 separate HELOC accounts.
You can separate your giant HELOC into smaller accounts at some banks. Then it’s easier and more importantly trackable for audit purposes.
.
heloc
Reverse mortgage/ HELOC?
The interests are tax deductible, as you pay down the mortgage you increase the investment value.
It’s not for everyone’s stomach, you have to be able to understand the high risk it can take, and that it can take a couple of years for the market to readjust for your capital to come back to where it was.
You can refinance and pull the money out.
>Is there any way to benefit from a rise in my home’s value if I don’t sell it?
You’re already benefiting in the form of lower mortgage payments, compared to someone else buying your home or a similar one today.
I have a HELOC and use it for investing into my TFSA every month to max it out.
Sure, use the equity from a remortgage or heloc and invest that cash in the stock market, if your balls are big enough!!!
The Smith Maneuver.
Take out a HELOC, invest in the market, and write the interest off.
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Increase in home value but you don’t sell translates to two things. Higher property taxes for you and increased leverage in the event you need credit to get money out of your home. I personally don’t like the values to skyrocket because it actually enables people to fuel the debt machine/credit crunch all while slowly diminishing your cash flow in the form of ever increasing taxes.