Anonymous wrote:We came into an extra $50k and are debating how to invest it. One possibility is a small apartment downtown that we can use for work during the week and list for short-term rental on the weekends. Is this a good idea or should we stick with the more conventional approach of paying down DW’s student loans and paying off the hybrid SUV care note?

I think city apartments should only be bought with play money. If you want to buy an investment rental, do that, and forget about staying there during the week. The fact that you have consumer debt and want to get into more debt instead of paying down what you have, is truly baffling to me.

Isn’t DC cracking down on short term rentals, via air bnb, vrbo, etc. you will need a permit to do this. You should do more research on this topic. Everyone thinks they can rent out their place to make money via Air bnb, etc, but don’t consider the logistics (condo board, HOA, neighbors, permits) or costs (cleaning after every single rental, upkeep, damage).

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You have a car loan and you're thinking about buying a second house?

That’s kind of an idiotic statement. I’m in finance & have multiple properties & investment properties. If I can’t get a better return on my money than the low interest rate on a car loan, then I’m a pretty lousy investor. Why wouldn’t I invest the amount instead of parking it in a car? Say I’m conservatively getting 5% on the money but only paying 2% interest on the car loan? That’s an easy 3%

If arbitrage of loans on depreciating consumer items is such a great idea, why aren't we all doing that full-time instead of our day jobs?

Because you have lower risk tolerance and/or aversion to debt on principle. And it’s not arbitrage, it’s just the decision to take on a new kind of debt or not.

Anonymous wrote:

Anonymous wrote:You have a car loan and you're thinking about buying a second house?

That’s kind of an idiotic statement. I’m in finance & have multiple properties & investment properties. If I can’t get a better return on my money than the low interest rate on a car loan, then I’m a pretty lousy investor. Why wouldn’t I invest the amount instead of parking it in a car? Say I’m conservatively getting 5% on the money but only paying 2% interest on the car loan? That’s an easy 3%

If arbitrage of loans on depreciating consumer items is such a great idea, why aren't we all doing that full-time instead of our day jobs?

All these anti-debt people are right for the wrong reasons. No, the OP shouldn't buy a pied-a-terre. But, his preexisting debt has nothing to do with that determination.

Debt is a tool. It shouldn't be feared irrationally; it should be used strategically. OP shouldn't buy the pied-a-terre, but he also shouldn't funnel his money to pay off low interest debt.

OP you have debt. Plain and simple. Use the $$ to pay that down/off then start saving for a second home.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Don't you need more than 20% down for a second house?

yep, and interest rates are usually higher too.

No you don't. I have a ton of money invesred in real estate. A second home, plus 3 rentals. I've never had to put doen more than 20.

Regardless, the OP either makes a smart investment or doesnt.

He's not buying a rental though. He wants to keep it to use and hopefully get some nightly rentals if/when he can (assuming such a thing is allowed by the association and isn't against the county laws etc), which financial institutions will not take into account as income. Plus the OP has loans. It's not the same thing as buying a stable long term rental coming from a secure financial position to start with.

This is the stupidest question -- if you have any loans at all, freaking pay those off first!!!!

Anonymous wrote:

Anonymous wrote:You have a car loan and you're thinking about buying a second house?

That’s kind of an idiotic statement. I’m in finance & have multiple properties & investment properties. If I can’t get a better return on my money than the low interest rate on a car loan, then I’m a pretty lousy investor. Why wouldn’t I invest the amount instead of parking it in a car? Say I’m conservatively getting 5% on the money but only paying 2% interest on the car loan? That’s an easy 3%

Except there is no such thing as a conservative 5%, especially in this interest rate environment.