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real estate question (S) help !?

I have a 100k+ in the bank (investments); I want to buy ( first home ) a small inexpensive house in the mountains. and will most likely sell in 2 -5 years (or rent depending on location) I will most likely inject another 5-10k in the property for modern upgrades. What would suit me best ? 30ymortgage? 15yr, or ARM? And what program would be my best target ? FHA, HUD, Foreclosure?? I am not too picky and I have the abilities to do major renovations. This property will most likely be in the Johnson city TN. area. And it is possible I might consider another (affordable) property in another state ( the following year for business). Now, what are my options and how can I least affect my bank investments. ONE last item how much should I put down? 20%+ (to cancel the PMI??)or is it worth it? I am making roughly 8.8% on all my bank investments. Thanks !

Public Comments

1. If you plan on renting it in 2-5 years then do 100% financing on a 30 year fixed interest only. There will be no negative amortization and unless the sky falls in your house will naturally start to appreciate again in the next 5-10 years while someone else pays your mortgage. If you plan on selling it in the next 2-5 years then an ARM would work ... possibly a 7 year with 20% down might be the way to go. Keep the interest rates low and pay down equity so you are not upside down when it's time to sell. Discuss all options with an experienced broker that can offer many programs that fit your needs.
2. The first thing you need to look at is HOW are you making 8.8% rate of return on your "bank investments"? Is that 8.8% NET or pretax? Is it tax defered, passive, active, or tax free? Understand ALL the numbers that go into getting that rate of return and you will have a good headstart on real estate investing because it is the SAME thing. You need to look at what your capitol requirment is, if you can "leverage: your money to improve your rate of return, do a study on LOCATION and find an area that has strong rental demands and rates, good property appreciation avgs., find a good lender to work with who can walk you thru the various lending programs and their costs and risks; find a good real estate INVESTMENT agent who can guide you to certain markets that will cashflow, find a good tax accountant that can walk you thru the "loopholes" that investing in real estate can provide you. The simple truth is that in real estate it is EASY to make 100% rate of REAL RETURN AFTER TAX if you know what you are doing AND have a good team around you. But it takes work, research, and brains. You will NOT see this on a "flip" tv show because that is the ballpark of beginers or people who like to gamble. PROS do NOT play that game. Here are a FEW reasons why. IF you buy, rehab, and sell in less then 1 year then you have to pay short term capitol gains taxs on any "profit" that you made. This can be as high as 33% so WHY would you give Uncle Sam a third of your profit when you are not REQUIRED to?? a better solution is to refinance the property after the rehab is done and any cash you receive is TAXFREE because you have NOT sold the property so there is "no taxable event". Next, you have roughly 10% closing costs on the buy and sell side of doing a flip, so if Uncle Sam gets 30% and commisons and fees are another 10%; you have just cut your "profit" by 40% to flip a property, that's REAL smart. The way you make money is real estate is to buy BELOW market value, have somebody else pay your holding or carrying costs on it, and sell after a LONG period of time if ever. The ONLY time I sell property is when I can live in it for 2 years and then sell and keep 250K TAXFREE gain by selling a "primary residence". Use renters to pay carrying costs UNTIL you have over 200K profit and then sell and take the gains tax free. Or just watch tv and give away 40% of your profit margin. Starting to see WHY they quote "gross profits" and fail to mention details???