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re: I need quick access to 75k-100k. What’s the best course of action?
Posted on 5/12/24 at 3:50 pm to C
Posted on 5/12/24 at 3:50 pm to C
quote:
I have a friend that flips houses. He uses a heloc on his current home to come up with cash quickly when he needs for a down payment on another home.
Yeesh. File that under things that work great until they don't.
0
Posted on 5/13/24 at 9:05 am to JohnnyKilroy
quote:
Do you have a substantial 401k balance and a rock steady employment status? Do a 401k loan.
This is almost always a bad idea and a really really really bad idea on a large amount of money.
Either he would be locked into his job where taking another opportunity basically doesnt exist until that gets paid off or really screwed if he got let go. 401k loans usually come due as soon as you leave within like 3 months, whether you were canned or not. If you cant pay it off within the 3 months, congrats, you now took a distribution which is taxable and getting his with penalties. So that would be quite the trap you're setting him into.
Long story short, the OP doesnt need to be borring a large amount of money from anywhere. He doesnt have much equity in his house and I probably doubt he has a very large 401k balance. They just need to adjust expectations on investments for a while until they DONT have to leverage themselves into a potentially terrible situation like what they are describing right now.
This post was edited on 5/13/24 at 9:11 am
Posted on 5/13/24 at 9:09 am to dualed
If you have $100k in equity you probably can't borrow $100k or even $75k on a heloc without being way over the loan to value ratio the bank would be okay with. In texas I think HELOCs are limited to 80% LTV, not sure about other states.
Posted on 5/13/24 at 10:30 am to Hermit Crab
It's 80% here too. I don't think that's a state thing, that's a bank thing.
Posted on 5/13/24 at 3:37 pm to dualed
quote:
Update. We ain’t buying because the house was shite . Oh and it’s 100k equity in my home valued around 285k.
You dodged a bullet. That’s cutting things way too close.
Posted on 5/19/24 at 6:22 pm to dualed
Didnt seem like you actually had the money to do this anyways, lots of stretching for a risky move.
Posted on 5/22/24 at 5:06 am to dualed
quote:If you have >$100K in an accessible securities portfolio, you can draw a loan (SBL) against that.
I need quick access to 75k-100k. What’s the best course of action?
Posted on 5/22/24 at 5:17 am to thunderbird1100
quote:
This is almost always a bad idea and a really really really bad idea on a large amount of money. Either he would be locked into his job where taking another opportunity basically doesnt exist until that gets paid off or really screwed if he got let go. 401k loans usually come due as soon as you leave within like 3 months, whether you were canned or not. If you cant pay it off within the 3 months, congrats, you now took a distribution which is taxable and getting his with penalties. So that would be quite the trap you're setting him into.
The move would be to get the cash quick via 401k loan and then refinance in a more traditional way shortly thereafter.
I just did this to fund a downpayment on my new house while waiting on my old house to sell. Took out 85k between wife and I. Paid it back in full 3 months after we got the loans when our old house sold.
I wouldn’t do a 401k loan for anything other than very short term. He “needed” cash quick and the 401k loan takes like a week or so. Just refinance after that and pay off the 401k loan. Should have been more clear in my original post.
Posted on 5/22/24 at 7:29 am to JohnnyKilroy
quote:
The move would be to get the cash quick via 401k loan and then refinance in a more traditional way shortly thereafter.
And what if it DOESNT work out this way. Again, you're assuming everything goes perfectly, it doesnt always work that way.
quote:
I wouldn’t do a 401k loan for anything other than very short term. He “needed” cash quick and the 401k loan takes like a week or so. Just refinance after that and pay off the 401k loan. Should have been more clear in my original post.
Again, opening himself up to a huge risk. You should never borrow large amounts of money from a 401k. This is not something he needs, it's a want, and it's a pretty dumb thing to go out and put yourself into that kind of bind over potentially for a want because of FOMO.
He's simply not there yet in terms of what he's trying to do financially. Taking shortcuts to put yourself into a potentially terrible situation is not the way to go about it. Again, we're also assuming here his 401k balance is even 150k-200k so he could borrow the 75k-100k against it, I would think that seems pretty unlikely to begin with considering his overall financial situation. Again, not that it would be a smart decision at all in the first place to do that if they could. This guy is trying to keep his current home to rent it out while going into a large amount of 401k loan (debt essentially) to buy some other property. It's just a really bad idea. Refinancing his current home at what 7% rates just to get the money to pay off the 401k loan? that just seems really dumb.
This post was edited on 5/22/24 at 7:37 am
Posted on 5/22/24 at 8:27 am to thunderbird1100
quote:And what if he gets hit by a bus and his family has to pick up the pieces without his income?
And what if it DOESNT work out this way. Again, you're assuming everything goes perfectly, it doesnt always work that way.
If you read my OP, I said he has to consider his job stability before considering it. It's part of a PLAN. Not something to figure out as he goes along. If his personal situation presents too much risk, then he shouldn't pursue it. It's just an option that's available.
quote:
Again, opening himself up to a huge risk.
It's not that huge of a risk. If shite goes sideways on his job, he can just sell the property he claimed was a below market bargain. It's not like he's taking out a loan and playing black jack with it.
quote:
This guy is trying to keep his current home to rent it out while going into a large amount of 401k loan (debt essentially) to buy some other property. It's just a really bad idea. Refinancing his current home at what 7% rates just to get the money to pay off the 401k loan?
He would refinance the NEW property and pay off the 401k loan. His ask was how to come up with money quickly. I assume he wasn't asking how to come up with 100k out of thin air that he didn't have to pay back or anything lol.
Get the 401k money quickly, grab the supposed steal of a property (which ultimately turned out to not be a steal at all so this whole argument is moot lol) and then refinance the new property immediately thereafter. If any of those steps seems too daunting or too much risk, then I agree that you have no business trying to acquire additional assets. You're not ready. If he believes there's a reasonable chance that he gets fired within the next month or two, then by all means DON'T take out a 401k loan. And probably also DON'T buy a speculative real estate investment.
Posted on 5/22/24 at 8:59 am to dualed
How quick? If you're going to rob someone you probably need to research and case the joint? You could always go in guns a blazin but this isn't the wild wild west.
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