Author Topic: Selling my condo...now what?  (Read 485 times)

iguana

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Selling my condo...now what?
« on: June 01, 2019, 07:34:28 PM »
Hi all. I've decided to sell my condo in DC. The main reason is that I can't manage it anymore with a little baby to take care of. My agent said I should get $250-275k for it. Assuming a $250k sale price after paying off the mortgage and taxes, etc, I'll hopefully have about $70k in cash coming my way. I'm trying to decide what to do with it. I live in northern Virginia in a little neighborhood where the housing costs are astronomical. I can't stomach paying $600k for a two bedroom townhouse. It's oddly a lot cheaper to rent, so I'll keep doing that.

My question is basically--what would you do with the $70k? It sounds like the typical mustachian answer would be to put it in VTSAX. But I'm wondering if anyone has any ideas I haven't considered? Thanks a bunch.

Papa bear

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Re: Selling my condo...now what?
« Reply #1 on: June 02, 2019, 06:24:37 AM »
Primary residence or rental?  If its a rental, you will need to factor in capital gains tax and depreciation recapture.

As for the money?  Id probably dca it into index funds. Follow the investment order guidelines that someone else will probably post.


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iguana

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Re: Selling my condo...now what?
« Reply #2 on: June 02, 2019, 09:09:23 PM »
Thanks for taking the time to read my post.

It's a rental, and my accountant factored in the taxes and depreciation recapture.

What does "dca it" mean?

nereo

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Re: Selling my condo...now what?
« Reply #3 on: June 03, 2019, 07:03:12 AM »
Thanks for taking the time to read my post.

It's a rental, and my accountant factored in the taxes and depreciation recapture.

What does "dca it" mean?
Dollar Cost Average.  In other words, Papa Bear is saying he would invest it periodically over a series of (most likely) months rather than invest it all in one go.    For example, if your ultimate take-home from the sale was $120,000, you could 'DCA' the proceeds by investing $10,000 every month for 12 months (or $5k/month over 2 years, etc).

Any time DCA comes up it worth noting that most of the time lump-sum investing wins out, though there are both psychological and capital-preservation reasons for DCAing. 
A few articles which go further into DCA/Lump sum investing

https://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/
https://www.mikeandlauren.com/what-is-your-emotional-threshold-when-investing/
https://personal.vanguard.com/pdf/s315.pdf (note, opens PDF)
https://www.bogleheads.org/forum/viewtopic.php?t=216498


nereo

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Re: Selling my condo...now what?
« Reply #4 on: June 03, 2019, 07:07:03 AM »
In further response to your original question - I'd use the proceeeds from the sale to reduce your taxable burden as much as possible.  For example, if you are not already maxing out your IRA/401(k) options, do so now, and use the proceeds from the sale to make up the difference in your paycheck.   

If it were me, that's what I'd do... I take whatever tax-advantaged 'headroom space' I have left and fill that with the sale, then lump-sum the rest into my existing index funds.

iguana

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Re: Selling my condo...now what?
« Reply #5 on: June 03, 2019, 10:36:32 AM »
Thanks so much for that! I had not heard of DCA, but it describes perfectly the hesitation I'm feeling about putting it all into something at once. But seems like that is the best move.

I already max out my work and individual retirement accounts, so I'll put it in a taxable account. I need to revisit the betterment vs vanguard thread to help me make that decision. Thanks a bunch!