Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

Recommended by:

pak73

To: Lazarus who wrote (68140)	7/21/2021 7:39:06 PM
From: E_K_S	1 Recommendation Read Replies (1) of 79045

Are any of these banks portfolio lenders? I know my credit union holds many of their loans and they even the HELOC loans. I have no debt but decided to get a HELOC loan on one of my properties to use as bridge financing on a small construction project I am planning (building an ADU). It is interest only and runs 10 years then converts to a fixed loan. My plan is to do the project which may take 18 months then just sell some stock to pay it off. It is a HELOC thru Charles Schwab (ie Schwab Bank). As it is on my Vacation Property (2nd Home), the rate they charge is pretty high at 4.5% (but is pegged to the prime rate). --------------------------------------------------- Currently Schwab pays me 0.05% on my cash holdings so w/ these HELOC loans they net 4% which is quite good. The last HELOC I had was during the 2009/2010 real estate crash and my rate was 2.3% 'fixed'. I used that for a remodel after I purchased in 2011 (a foreclosure) $250K plus $75K remodel. Today Zillow says it's worth $880K. I am working on a re-zone to a condominium subdivision (from Duplex) which would create two Townhouses. Based on recent Townhouse sales in the area, the value of each Townhouse would be $800K (and maybe higher). Tahoe Beach Club (Note: Just dumb luck but 10 years ago the mobile home park was converted into the Tahoe Beach Club) I have no plans to ever sell but for estate planning, two Townhouses (separate APN Numbers) allows me to gift and/or deed one of the units to kids/grandkids, do an installment sale and/or get another HELOC for more real estate projects. -------------------------------------------------- The Investment Lesson is there are always Value opportunities if you get ( & control) the assets at an undervalued price. I had no expectations that my undervalued Duplex would/could ever be converted to two upscale Townhouses. There happened to be a new development down the street (less than 1/8 of a mile) where their new Townhouses are all sold out at prices ranging from $1.2 million to $3.5 million. That even includes HOA fees of $850/month. FWIW, my HOA fees are $100/year! --------------------------------------------------- Maybe one of those sour loans the bank have can be bought for $0.50/dollar and it is in an area 'ripe' for new development. Lesson Two; having cash available to BUY these real estate assets makes the opportunity a reality!

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next