Q: My husband and I own our house. We'd like to invest in a building with two or three apartments. We owe about $8,000 on our home and haven't much in savings. Would it be best to refinance our house, get a second mortgage on it or borrow on it? How could we come up with a 30 percent down payment on the apartment building without going into our savings? Is there any type of investment service where I can get counseling?
A: You haven't indicated the fair market value of your house. But assuming you have significant equity in it, you may be able to refinance it. Try your credit union (if you belong to one) or a savings and loan institution where you're a depositor. Otherwise, money to refinance a home is hard to get. I think refinancing may be better than a second mortgage. But investigate both and compare availability and cost.
Borrowing on your home sounds like the best way to come up with the down payment. You may have to dip into your savings. Try to get the seller to take back a mortgage for the remainder of the selling price. In fact, if you can get seller-financing, you may be able to negotiate a smaller down payment.
Look in the Yellow Pages under "Real Estate -- Consultant" or "Real Estate -- Investment Counselor." Talk to two or three and ask for references.
Q: About a year-and-a-half ago, my husband and I brought as an investment two new buildings, each containing six apartments. We paid part of both down payments by mortgaging our home. With the economy as it is, I feel we should sell one of the buildings and pay off our own mortgage. Its interest rate is 8 3/4 percent. My husband thinks we're better off to keep both apartment buildings. He isn't afraid of a recession or a depression. What do you think we should do?
A: If you have a positive cash flow from these buildings, or if the spendable income from them allows you to at least break even, I'd keep both buildings. You don't appear to be having financial difficulties. So why get rid of a good investment and just about the best inflation hedge available?
Q: Please suggest some books about investing in real estate.
A: "How You Can Become Financially Independent by Investing in Real Estate" by Lowry (1977, Simon & Schuster), and "Real Estate Tax Shelter Desk Book," IBP Stafff (1980, Institute for Business Planning).
Also: "Analyzing a Real Estate Investment," Real Estate Review Portfolio Number 4 (Warren, Gorham & Lamont); "Real Estate Investment Analysis and Taxation," Wendt & Cerf (1979, McGraw-Hill); "Protect Yourself in Real Estate" (1977, McGraw-Hill); Journal of Property Management (periodical), published by the Institute of Real Estate Management, 155 E. Superior St., Chicago 60611; "Principles of Real Estate Management" (11th ed.), Downs, 1975, Institute of Real Estate Management, Chicago.