IMHO. Buy with cash, (leverage) then refinance with a HELOC or a 3.5% 15yr as needed for cash reserves. (credit union is my preferred lender)

Tho my real advice. is to use house equity on a accessible & desire able ‘retirement friendly’ multi family facility that cash flows at

10% Net AND is in a location you love to visit, or preferably end up living.

Then you use postive cash flows to rent wherever you feel like living. Paris, Paraguay, Peoria, Phoenix, Portland.

When you are ready to REALLY retire. stay home, then you use one of your units in rental, or trade it (1031) for a primary residence of your choice. (You can ‘convert’ either to primary residence to shelter LTCG up to $500k, special rules apply to converting a previous income property, but they are very ez to comply.)

I hope to never have another primary residence. Except as needed for sheltered income ($500k every 2 yrs under current law). Sheltered income (not taxed) will become very valuable in the not to distant future of USA.

My bottom line is that a home is NOT an asset, but a liability. YOU decide what best fits your investment / security needs. I am plenty happy having several rental places paid off that I could move to, while having a moderate mortgage or HELOC @ 3-5% to avail cash for screaming good investment deals (Current Mortgage actually only 10% LTV ratio for me. i.e. $150k loan @ 2.7% on a

$750k property (for which I have a $150k cost basis. homeschool building project with kids). I invest my home equity ONLY in RE that I KNOW is undervalued. and desirable enough to sell for 30% more than I pay for it. Those properties are everywhere at the moment, and having cash available is a very good thing.

I have been far more successful at making $$ by leveraging cheap mortgage money, than I have been playing the equity markets for 40 yrs. I trust you have other investment options and more success than I.

BTW: I have had little to no trouble with senior tenants (or non-senior), AND I do not use a management company, AND I do not fix toilets. My rental agreement is tough, but I am benevolent. I give my tenants a 5% annual bonus (Cash Back) on their Dec Payment (50% of payment back) IF. They have never been late or caused me to come track them down for an issue. AND if they have taken care of most / all issues using a list of contractors / servicemen I provide. I work like a dog right beside them on a few projects. and I drive a $35 car. They appreciate me, and I appreciate them. (That is called a Win:Win)

Last edited by StealthRabbit; 09-18-2011 at 02:40 PM.