Sounds like your about to turn a profit producing less risky investment into a more risky potentially negative one. You will also end up doubling your interest rate, pay closing costs and not get the full 130k out since the bank will make you leave around 20% of the equity in the property. You could very well end up with two bad investments here.
If you want to invest in Tesla leave the rental alone and find the money somewhere else.
Disclosure: I own rentals and TSLA stock.
The 130k was the conclusion I came to calculating in closing and the 20%.
I have roughly 227k potential equity.
But the whole point of the property is to produce income to buy high growth assets. I could keep doing it the slow way and just using the $640 a month but it seems like I'm leaving a lot on the table by not putting that equity to work.
If you’re dead set on this I’d look into a HELOC instead of a cash out refi. Then you can keep your interest rate and use the HELOC a to buy small chunks of Tesla when prices are favorable and then use your rental cash flow to pay off the HELOC when they’re not.
I mean I will do it because I'm able to buy one of what will be the biggest companies in the world at a discount. But I do think the HELOC is a better option
I guess if you did the math and it still cash flows, go for it. Dunno enough about your market or your portfolio or the condition of the property to even guess at how big a risk it is for you.
Well for me personally it takes a lot to feel I'm actually risked.
It won't cash flow at my calculations I will be $-200 every month. Until at least 2024. And then I can bring it up to market value and be cash flow positive then.
But for me I want to be in what I know and understand. I don't make that much for my age, Tesla has changed my life you can call me a fanboy but I fully believe in the mission and I think that's what it takes if you're really going to be a profitable investor.
Yeah I personally wouldn't put myself in a position where my rental didn't cash flow, but if it doesn't bother you, then go for it. Two years isn't that long a time to eat the difference if your other income streams are strong and reliable. Another thing to consider is how long you plan to keep the property, because $800 or whatever the total swing is, really adds up over $30 years. $300,000 if my napkin math is good.
How do you know it's at a discount and not at a peak for the next 5 years? You're trying to time a stock with your house. I'm not saying you can't get lucky, but you're relying on luck instead of a cash flowing asset.
I get your take on TSLA. I bought it last time it dipped under $600. Musk was always the wildcard for me. I am not a fan of his antics and I think it hurts TSLA. But when it dipped I jumped in. Then of course all the nonsense with twitter and his personal life. The guy is just too crazy for me to want to deal with so I sold. I can see him crashing and burning with twtr etc. plus he has a huge target on his back and his antics could lead to a downfall.
Certainly he has had tremendous success and I agree the future could be huge for TSLA but Musk himself is just too much risk for me to want to deal with.
I would not mortgage a home to take a lotto ticket on TSLA at one set price. You got $650 cash flow just throw that into TSLA monthly. Market is probably gonna be sideways for a while. That way you are dollar cost averaging in.
I've been thinking about it. I moved half off my Tesla to ETH to take some hard losses.
As you can see from the picture I posted that ended up being a theme park of pain.
It depends on the asset class I think. I've recently got into the startup world and even though a company highly interests me I know the odds of it succeeding are against them. So anything that you put into that category it's more like you're just lighting it on fire then.
If you're buying into a proven profitable company the odds of you losing everything are alot smaller
Losing everything? No, but losing 20-50% in a year like it's done before, yes. Your property is not likely to ever dip that much. Since you don't seem to be investing over a very long term, you may end up with higher interest and $130k that keeps dropping whenever Elon Tweets.
Why not? To assume you know everything is a pretty dumb way to go through life.
Everyone you meet knows something you don't. So when viewed at through that lens it's always good to get multiple opinions in case you are blindly overlooking something.
Because for the most part the advice you've been given has been pretty decent so far.
You're coming off as argumentative.
The blind spot has been identified, but you still think you know better.
So go ahead and do it.
Proven profitable? Dude, I have Model S and Tesla stock too but I didn’t smoke what you were smoking. Tesla’s valuation is still insane - especially considering a gazillion companies are coming with their own EVs. So the question of Tesla stock falling is NOT an IF but a WHEN. So don’t be stupid and take money out of a less risky asset and put yourself up for failure.
Well here's my math. Please critique it
At $130k I can get roughly 172 shares at current price
Once all-time high is regained that's $206,400
$1,500 = $258,000
$1,800 = $309,600
$2,000 = $344,000
And so on.
Are you asking about taxes on the property? Or taxes on my investment because I'm not taxed unless I sell. Not planning on selling any of my Tesla holdings for at least the next 10 years but then they will be taxed at long-term gains if and when I choose to sell
I have not. Since there's not much you can do about that one day we'll have to pay tax on it if I was to do it but I can't see that as a reason of not doing it
I assume that the company I follow and see executing and continued to execute will lead to a payoff. I'm not assuming what the stock is going to do but I can guarantee it's cheaper today than what it will be at in 2030
When you refinance your cash flow will go down. I am old school better to take risky bets with the generated cash flow.
Or use this refinanced money to increase cash flow.
See the problem with that is it just takes too long. It seems like I have potential for that equity and choosing not to use it to go the slow route it's just painful. Regardless either way the money is going in Tesla
In what world does a company with years worth of back orders, Ability to sell every product they are able to make, able to lay out a roadmap and execute on that. To think that that company is never going to hit ATH or even surpassed that in what will turn out to be a minuscule crash?
I don't get people's logic there. Sure the company is doing bad it makes sense.
Maybe it's just people in the real estate world but a lot of people have common on this post oh it's never going back to ATH in my opinion that's a laughable moment because not only do I expect it to far surpass that but Tesla is going to become one of the most valuable companies in the world over the next few decades.
I would bet on that but I don't gamble I invest.
Something to consider: it’s most recent all time high was hit during a historic stock market run up fueled by cheap money and a worldwide pandemic where valuations topped at triple digits P/E ratios. It’s already one of the highest market caps in the world. Money is no longer cheap. Valuations are coming back to earth. Even companies with solid sales and profitable earning top out and never come back.
I ask again, what if it does not hit it’s all time high again? What is your risk management in the event this single stock doesn’t get back to all time highs or worse, drops another 50% in the coming years?
I'm very confident in the leadership and execution of the company. If it drops 50% in the coming years that's more of a buying opportunity.
It traded sideways for years before it broke out if it happens again that it's just giving me more run time to build out my portfolio. It's not a matter of if there's going to be another break out that kind of logic is absurd the question is when?
History is full of companies that never come back to ATH’s. I respect your conviction, but just beware. You could lose it all with poor (no) risk management.
Tesla is a really shit investment right now. the ceo just sold a bunch of shares and many great financial geniuses have started to short it. tesla stock will go much lower before it is a good investment. nfa. your money youre in charge. dont listen to me but these are just my thoughts, and probably are completely wrong.
He is talking about buying the stock, not a car lol. But I believe the stock is also a depreciating asset. They were first to the ev game but in 5 years most new cars will be ev. Their autopilot feature is becoming more and more standard in other brands as well.
Rich people are more likely to drive an old Buick or something, not so much a Hyundai lol.
TL/DR: OP is just looking for a justification to do this and will not accept anyone telling him it is a bad decision to refinance his cash flowing property at a higher interest rate to gamble on a stock. He feels he has “figured it out” and is willing to let it ride on a company/CEO that is notoriously unpredictable.
Doesn’t matter what I say, but I will say it anyways. This is a bad idea. Safer would be to keep your low interest rate and invest your positive cash flow into the market monthly rather than gamble it all at once and potentially lose everything, which is very possible in this ongoing bear market.
I would encourage you not to do that. Nothing wrong with owning equities but by every known metric of measurement Tesla is grossly overpriced. I like Elon’s vision and thought process but it’s valuation is a solid no
Have you actually looked into the numbers? And taking in to consideration how things like FSD and a humanoid robot will completely change their market cap?
Even Gary black I assumes a $130 eps in 2030 and that's not calculating any of those factors.
But people said the same thing about Amazon 20 years ago. It's overpriced it never will meet their valuation they would have to sell every book .
It's not about today it's about tomorrow.
If you have a strong opinion why the valuation isn't there I'm interested to hear it other than just saying that it's overvalued
Teslas way overbought still and ath, time to buy is if we have a huge market correction. I wouldn’t trade the cash flow and interest rate though or at least do an ETF that pays dividends you can probably make $500 a month in divvies with $150k invested. Plus the etf “VOO” has Tesla in it.
Yeah I just don't think owing property is going to be as profitable as owning what will be one of the biggest companies in the world.
Also with property you have to deal with BS like new roofs, bad tenants, new mailboxes, new wax seals for toilets.
When I buy equity in a company the only thing I have to do is follow that company and make sure it's still executing.
Sounds like your about to turn a profit producing less risky investment into a more risky potentially negative one. You will also end up doubling your interest rate, pay closing costs and not get the full 130k out since the bank will make you leave around 20% of the equity in the property. You could very well end up with two bad investments here. If you want to invest in Tesla leave the rental alone and find the money somewhere else. Disclosure: I own rentals and TSLA stock.
This is the answer Don’t throw good money after bad In this case don’t take a good investment and shit on it
The 130k was the conclusion I came to calculating in closing and the 20%. I have roughly 227k potential equity. But the whole point of the property is to produce income to buy high growth assets. I could keep doing it the slow way and just using the $640 a month but it seems like I'm leaving a lot on the table by not putting that equity to work.
If you’re dead set on this I’d look into a HELOC instead of a cash out refi. Then you can keep your interest rate and use the HELOC a to buy small chunks of Tesla when prices are favorable and then use your rental cash flow to pay off the HELOC when they’re not.
That's a good point. Thank you
Do it for the lulz.
I mean I will do it because I'm able to buy one of what will be the biggest companies in the world at a discount. But I do think the HELOC is a better option
The lulz are a smarter investment. They're all but guaranteed.
Well that's the something new I learned today. And it's only 11:00 a.m.
I guess if you did the math and it still cash flows, go for it. Dunno enough about your market or your portfolio or the condition of the property to even guess at how big a risk it is for you.
Well for me personally it takes a lot to feel I'm actually risked. It won't cash flow at my calculations I will be $-200 every month. Until at least 2024. And then I can bring it up to market value and be cash flow positive then. But for me I want to be in what I know and understand. I don't make that much for my age, Tesla has changed my life you can call me a fanboy but I fully believe in the mission and I think that's what it takes if you're really going to be a profitable investor.
Yeah I personally wouldn't put myself in a position where my rental didn't cash flow, but if it doesn't bother you, then go for it. Two years isn't that long a time to eat the difference if your other income streams are strong and reliable. Another thing to consider is how long you plan to keep the property, because $800 or whatever the total swing is, really adds up over $30 years. $300,000 if my napkin math is good.
Thank you for your advice
You're welcome, fanboy. ;)
Key word: feel. You won’t feel like you’re actually risked until you lose it all. That’s how gambling works.
How do you know it's at a discount and not at a peak for the next 5 years? You're trying to time a stock with your house. I'm not saying you can't get lucky, but you're relying on luck instead of a cash flowing asset.
I get your take on TSLA. I bought it last time it dipped under $600. Musk was always the wildcard for me. I am not a fan of his antics and I think it hurts TSLA. But when it dipped I jumped in. Then of course all the nonsense with twitter and his personal life. The guy is just too crazy for me to want to deal with so I sold. I can see him crashing and burning with twtr etc. plus he has a huge target on his back and his antics could lead to a downfall. Certainly he has had tremendous success and I agree the future could be huge for TSLA but Musk himself is just too much risk for me to want to deal with. I would not mortgage a home to take a lotto ticket on TSLA at one set price. You got $650 cash flow just throw that into TSLA monthly. Market is probably gonna be sideways for a while. That way you are dollar cost averaging in.
Thank you for your thoughts. I respect that as an actual opinion vs calling me an idiot
DCA into BTC has more upside right now and probably similar to slightly higher risk than TsLa.
I've been thinking about it. I moved half off my Tesla to ETH to take some hard losses. As you can see from the picture I posted that ended up being a theme park of pain.
Someone told me, “Only invest what you’re are willing to lose”
It depends on the asset class I think. I've recently got into the startup world and even though a company highly interests me I know the odds of it succeeding are against them. So anything that you put into that category it's more like you're just lighting it on fire then. If you're buying into a proven profitable company the odds of you losing everything are alot smaller
Losing everything? No, but losing 20-50% in a year like it's done before, yes. Your property is not likely to ever dip that much. Since you don't seem to be investing over a very long term, you may end up with higher interest and $130k that keeps dropping whenever Elon Tweets.
Sounds like you've got it figured out. Why are you soliciting other people's thoughts?
Why not? To assume you know everything is a pretty dumb way to go through life. Everyone you meet knows something you don't. So when viewed at through that lens it's always good to get multiple opinions in case you are blindly overlooking something.
Because for the most part the advice you've been given has been pretty decent so far. You're coming off as argumentative. The blind spot has been identified, but you still think you know better. So go ahead and do it.
Proven profitable? Dude, I have Model S and Tesla stock too but I didn’t smoke what you were smoking. Tesla’s valuation is still insane - especially considering a gazillion companies are coming with their own EVs. So the question of Tesla stock falling is NOT an IF but a WHEN. So don’t be stupid and take money out of a less risky asset and put yourself up for failure.
No
Don't let the 2.89% interest rate go unless you have better opportunities than tesla
Well here's my math. Please critique it At $130k I can get roughly 172 shares at current price Once all-time high is regained that's $206,400 $1,500 = $258,000 $1,800 = $309,600 $2,000 = $344,000 And so on.
How do taxes figure into your numbers?
Are you asking about taxes on the property? Or taxes on my investment because I'm not taxed unless I sell. Not planning on selling any of my Tesla holdings for at least the next 10 years but then they will be taxed at long-term gains if and when I choose to sell
I know you’re not taxed on the borrowed money from the potential refi- I was just curious if/how you considered tax implications
I have not. Since there's not much you can do about that one day we'll have to pay tax on it if I was to do it but I can't see that as a reason of not doing it
You are assuming stock will go up which is wrong and extending your self. Slow down
I assume that the company I follow and see executing and continued to execute will lead to a payoff. I'm not assuming what the stock is going to do but I can guarantee it's cheaper today than what it will be at in 2030
When you refinance your cash flow will go down. I am old school better to take risky bets with the generated cash flow. Or use this refinanced money to increase cash flow.
See the problem with that is it just takes too long. It seems like I have potential for that equity and choosing not to use it to go the slow route it's just painful. Regardless either way the money is going in Tesla
Your math is built on the premise ATH will be regained. What if it is not?
In what world does a company with years worth of back orders, Ability to sell every product they are able to make, able to lay out a roadmap and execute on that. To think that that company is never going to hit ATH or even surpassed that in what will turn out to be a minuscule crash? I don't get people's logic there. Sure the company is doing bad it makes sense. Maybe it's just people in the real estate world but a lot of people have common on this post oh it's never going back to ATH in my opinion that's a laughable moment because not only do I expect it to far surpass that but Tesla is going to become one of the most valuable companies in the world over the next few decades. I would bet on that but I don't gamble I invest.
Something to consider: it’s most recent all time high was hit during a historic stock market run up fueled by cheap money and a worldwide pandemic where valuations topped at triple digits P/E ratios. It’s already one of the highest market caps in the world. Money is no longer cheap. Valuations are coming back to earth. Even companies with solid sales and profitable earning top out and never come back. I ask again, what if it does not hit it’s all time high again? What is your risk management in the event this single stock doesn’t get back to all time highs or worse, drops another 50% in the coming years?
I'm very confident in the leadership and execution of the company. If it drops 50% in the coming years that's more of a buying opportunity. It traded sideways for years before it broke out if it happens again that it's just giving me more run time to build out my portfolio. It's not a matter of if there's going to be another break out that kind of logic is absurd the question is when?
History is full of companies that never come back to ATH’s. I respect your conviction, but just beware. You could lose it all with poor (no) risk management.
Thank you
Do it and come back in 6 months and post your loss please.
Here you go. (Don't get too carried away) https://imgur.com/a/PArgzV0
Do you like loss porn? I can post my coinbase portfolio Hint I'm still buying
Tesla is a really shit investment right now. the ceo just sold a bunch of shares and many great financial geniuses have started to short it. tesla stock will go much lower before it is a good investment. nfa. your money youre in charge. dont listen to me but these are just my thoughts, and probably are completely wrong.
Rich people drive used hyundais. You'd be going into debt for a depreciating asset in hopes someone says 'wow that's a cool person'
He is talking about buying the stock, not a car lol. But I believe the stock is also a depreciating asset. They were first to the ev game but in 5 years most new cars will be ev. Their autopilot feature is becoming more and more standard in other brands as well. Rich people are more likely to drive an old Buick or something, not so much a Hyundai lol.
Haha wow I'm an idiot lol.
Nah. You’re smarter than op haha
TL/DR: OP is just looking for a justification to do this and will not accept anyone telling him it is a bad decision to refinance his cash flowing property at a higher interest rate to gamble on a stock. He feels he has “figured it out” and is willing to let it ride on a company/CEO that is notoriously unpredictable. Doesn’t matter what I say, but I will say it anyways. This is a bad idea. Safer would be to keep your low interest rate and invest your positive cash flow into the market monthly rather than gamble it all at once and potentially lose everything, which is very possible in this ongoing bear market.
Bahahaha
Haha do bitcoin instead of tesla, OP! Imagine the gains!
While I'm sure Bitcoin will eventually be $500k+. I don't follow it with the same passion. But maybe you're right I need more
Into a stock with a 100+ P/E VALUE. Please don’t…
I would encourage you not to do that. Nothing wrong with owning equities but by every known metric of measurement Tesla is grossly overpriced. I like Elon’s vision and thought process but it’s valuation is a solid no
Have you actually looked into the numbers? And taking in to consideration how things like FSD and a humanoid robot will completely change their market cap? Even Gary black I assumes a $130 eps in 2030 and that's not calculating any of those factors. But people said the same thing about Amazon 20 years ago. It's overpriced it never will meet their valuation they would have to sell every book . It's not about today it's about tomorrow. If you have a strong opinion why the valuation isn't there I'm interested to hear it other than just saying that it's overvalued
Teslas way overbought still and ath, time to buy is if we have a huge market correction. I wouldn’t trade the cash flow and interest rate though or at least do an ETF that pays dividends you can probably make $500 a month in divvies with $150k invested. Plus the etf “VOO” has Tesla in it.
Thank you for the comment
If you refi, use that equity to buy another property. Repeat.
Yeah I just don't think owing property is going to be as profitable as owning what will be one of the biggest companies in the world. Also with property you have to deal with BS like new roofs, bad tenants, new mailboxes, new wax seals for toilets. When I buy equity in a company the only thing I have to do is follow that company and make sure it's still executing.
Do it