Brownsfan2k5
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I plan on retiring in 15 years. I currently have 4 rental properties that I rent out and still have 10 years left on their mortgages. I have a 401k with 100,000 and I also have 20,000 in student loans with an 8 percent interest rate and a home mortgage for 120,000 with a 3.5 percent interest rate. My question is this: I will be receiving $600 dollars a month for 30 years starting this month (Verizon tower on property) what is the best thing to do with the money? Pay bills? Invest in Roth IRA?
Any advise! Thanks!
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Fri Mar 15, 2013 1:12 pm |
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kimmy burgess
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Joined: 12 Mar 2013
Location: California
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quote:
Originally posted by Brownsfan2k5
I currently have 4 rental properties that I rent out and still have 10 years left on their mortgages. I have a 401k with 100,000 and I also have 20,000 in student loans with an 8 percent interest rate and a home mortgage for 120,000 with a 3.5 percent interest rate. My question is this: I will be receiving $600 dollars a month for 30 years starting this month (Verizon tower on property) what is the best thing to do with the money? Pay bills? Invest in Roth IRA?
Any advise! Thanks!
I don't think you want number of loans on your head even after retirement. So, my personnel advice is to pay off the bills as soon as possible. After that you ca think of your retirement plans also.
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Sat Mar 16, 2013 5:59 am |
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oldguy
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I would use some of the rental house equity to build up the 401k and build a taxable SP500 index fund. The 3.5% home loan is a keeper. Put 30 yr fixed rate loans on the income houses, the rate will probably be 5% to 5.5%, there is about a 1% to 1.5% premium on NonOwnerOccupied houses - my last refi was 5.5%. I like to keep our rentals fully leveraged, especially now while 30-year capital is so cheap. (Those 30-yr fixed rate loans will look real good when you are age 73 and others are paying 8% or 10% for capital.
I would use your first lump sum to clear that 8% note, I would definitely convert that to 5% or 5.5%. Right now, I borrow/keep loans at <5.5% and invest at 11%/yr. Ie, I would not keet an 8% loanj.
The plan would be to move as much capital as you can into SP500 index funds - your cell tower $7200/yr alone will be $1,600,000 in 30 yrs if you use a 11%/yr return.
BTW, your retirement age doesn't have nearly the impact that most people think. By then your salary will be only a small part of your income stream.
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Sat Mar 16, 2013 3:09 pm |
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noah herman
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Hi..Brownsfan2k5,
My personal advise is that please pay off the loan as soon as possible first. because the rate of interest they are charging is more (8 %). after that you can plan for the retirement. lots of Retirement plan is now available in market.
Thanks. 
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Fri Mar 22, 2013 12:02 pm |
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