Hello friends. Welcome to another episode of Ask Marco. Well, I appreciate the listener questions that are coming in. These are some great questions I picked out five or six for today. The questions are just getting a little bit more sophisticated and thoughtful. Some of these emails are fairly detailed. There's just paragraphs of information and I like the extra detail and information because it helps me to construct a better answer around the context and detail that you provide. So it is a good thing. Just takes a little bit longer to read and process of course, but that's all well and fine. I actually love the questions and of course, you know, I love real estate. But before I jump into the first question here, I just hope everybody's having a great year so far. It's September. We're working our way into that last quarter in the final stretch of the year. So hopefully it's been a great year for you. For me, it's been crazy, just a, a wild ride in a very positive way. So lots of good things going on, real estate related and otherwise. So with that, let me jump right into the first question here.

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If you missed our last episode, be sure to listen to Housing Trends Market Update – August 2023

So this first question comes from Tara. I believe it's Tara, not Tara, Tara, I'm not sure now. Well, anyway, she says, hi Marco. I've been thoroughly enjoying your podcast, which is a wealth of good information. I'm just getting started in my path to financial and time freedom and I'm looking to get started in short-term rentals using other people's money. She abbreviates that here. As OPM I currently have a condo, which is my private residence in Southern California, which is about $450,000 in equity and a 2.9% interest rate, which I assume is just a single first mortgage on there.

By the way, that 2.9% interest rate is fantastic. You've locked in near the bottom as far as principal residence interest rate, especially in California. Good for you. She says I have a small cash savings of about $60,000 and some stocks. So I'd like to also consider moving into a new primary residence and rent out the condo. Can you help me strategize the best way to go about getting started with my next step? Thank you Tara , I'm sorry if I'm mispronouncing your name. Well, great question. So I think the assumption that I'm making which is the assumption you're probably making is that it is in your best interest to keep the condo and move into another home in Southern California and keep that condo as a rental, which would make sense and might make sense if the market here wasn't so expensive. But if you're leaving that condo behind with all that equity, sounds like you probably have a relatively speaking small mortgage with a very low interest rate.

So your monthly payments are probably small and almost laughable in Southern California. But if you have a great first property and you're living inexpensively by moving out now into another property, you're gonna need a significant down payment, which it at this point, it's gonna have to come from the property through either a refinance or an equity line of credit or an equity loan because you're gonna need to add to the $60,000 that you have to create the down payment to move into another home. And of course this is gonna depend on the type of financing you get on that new home. If you have a very low down FHA mortgage that you can qualify for, great. But if you're looking at conventional financing, you're probably looking at a 20% down payment. 20% in Southern California is a pretty large number because of the property values here.

So I don't know how much stock you have, but if you sell your stock to add to the 60,000 to come up with a down payment that you're gonna need for your principal residence, which is a second property, in order for you to keep the condo as a rental, you're looking at, you know,