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Investment Properties...which way to turn

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jaeco
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Investment Properties...which way to turn  Reply with quote  

I will try to make this simple.

I own a house that we have had rental income from since 1990. It's been a good rental property. We've not had a lot of trouble with the renters so we've been lucky. We have not put much money into this house at all. Now, finally, that's catching up. I think it will cost around $8000 to fix it up to rent. If I sell it I would sell it as is since I live out of state. When rented it rents for $1200, This house is not paid off and the payment is $500 including taxes/ins, so rented at $1200 we realize $700/mo...not counting maintenance. If I sell it will be only for about $120,000 according to the realtor. We owe $39,000 on the house.

So, if we sell we would pay off about $40,000 in debt that we have...although if we applied outselves we could pay that off in a couple years.

If we do NOT sell, we hopefully would realize the $700/mo. we would get in rent. That $700 currently pays the house payment for the house we live in. We are 65 years old. Goal we're looking at is have ourselves hopefully together by age 67.

PLUS...I have a farm that I own with my sister. 24 acres, ranch built in 1969...rented out since 2000. It's getting shabby and I fear will need big repairs soon. This house currently has a good renter but in the past this has been difficult to rent. Doesn't seem like it is an area that is likely for developer to purchase. As it stands now, realtor says probably $275,000 to 300,000. This I would split with my sister. This has no mortgage and my portion of the rent is only $344/mo.

My thought is this. Sell the farm..The return on that isn't much and the repairs that are needed will be expensive. House hasn't been updated really at all. Sell that one mainly because of the return and difficult to rent, etc.

My big dilemma is whether to try to sell the other house. The return is great I think, pays my house payment here.

If I sell both though, I could pay off house here, pay the bills, etc. with maybe $40,000 cash left over.

I wonder if it's a good idea to have my residence paid off...with less cash in the bank...debt all paid, no income from rentals.

I hope this made some sense. Any input would be appreciated.
Post Sun Feb 26, 2017 10:41 pm
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oldguy
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If you sell the house you'll have the $120,000 minus the $39,000 loan minus some sales expenses, maybe $70,000 cash If you invested that $70,000 at 8%/yr you'll get about $5600/yr income, almost enough to meet the mortgage on your home.

And if you sell the farm, your share will be about $125,000, after expenses. If you invest that at 5%/yr you'll get about $6000/year.

If you have a good mortgage rate on your home, I would keep the mortgage and retain the use of your cash. And if your mortgage is not so good, maybe you could refinance it at a higher amount and a lower rate.
Some folks want their house paid off. But it is generally safer to hang on to your cash. If you are retired, in a paid-for house, and have emergencies, you can't get access to that money that is locked into your house, ie you are broke. But if you keep your mortgage (and your money) you can use your cash to pay that $500/mon for years - and buy food, gasoline, heat, etc.
Post Sun Feb 26, 2017 11:29 pm
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jaeco
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What kind of investment would you suggest? I haven't gotten 8% for ages. Hardly 6%. At 65 I'm afraid we'll have some big fallout and I will lose money like 2008 I think it was. I wouldn't worry so much but not as much time to recover at age 65. I like your recommendation on my issues...I always worried about having house paid off and no cash,..

Oh, I won't have the $70,000 because of debts that need to be paid...so I would walk away with only 40,000....Thanks..
Post Sun Feb 26, 2017 11:51 pm
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oldguy
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quote:
What kind of investment


I use the SP500 Index Fund, the no-load fund companies have them - Vanguard or Fidelity. The longterm return has averaged 11%/yr. But, at our age, we are past our wealth-building years and into our wealth-preservation years. I about 50% in the SP500 Index and 50% in bond funds. The stocks pay 11% and the bonds pay about 5% - so my average is about 8%/yr.

http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.WLOBp3-yDSZ
Here is the history of the SP500 Index, note that almost any 30-year block of time has an 11% average return. So that is great for a 30-yr-old - which is what I did, my 401k was 100% in the SP500.
Post Mon Feb 27, 2017 1:35 am
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jaeco
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Thanks for your info. I'll check it out. I've been driving myself crazy trying to decide whether to sell that rental house...not the farm, I know I want to sell that, but on the rental house I kept looking at the *profit* I make each month when renting it. I'll check out the Index Fund. I need to make a good decison..Not a lot of time to regroup:) Thanks for your time.
Post Mon Feb 27, 2017 1:39 am
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WatsonZion
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On the off chance that you have a decent home loan rate on your home, I would keep the home loan and hold the utilization of your money. What's more, if your home loan is not very great, perhaps you could renegotiate it at a higher Master’s Thesis Consulting Help service sum and a lower rate. On the off chance that you are resigned, in a paid-for house, and have crises, you can't access that cash that is bolted into your home, ie you are bankrupt.
Post Wed Mar 29, 2017 6:08 am
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Goodcat49
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Alternative real estate investment  Reply with quote  

Proof, a Korean financial technology company run by American and European expats, has launched property investment opportunities whereby users can buy small stakes of ownership for less than $3.

While $3 won’t buy much of a property, Proof registers ownership records on thousands of computers via blockchain technology, giving buyers “proof” of ownership backed by legal agreements and property liens to protect investments.

You can read the full article here: https://coinidol.com/blockchain-platform-proof-made-property-investment-cheap/
Post Wed Apr 12, 2017 11:00 pm
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