Author Topic: House paid off, thinking about selling, renting and investing  (Read 675 times)

johnwpowell

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Just paid off a 550k mortgage thinking it would put us in good shape.  The reality is that with taxes and expenses we are nearly at cost of renting.  Then there is the opportunity cost of not investing that equity.  The house is appreciating at 1% a year.  I should be able to get 7.

Should I sell up and invest the equity instead?
 

tralfamadorian

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Re: House paid off, thinking about selling, renting and investing
« Reply #1 on: January 13, 2018, 03:29:42 PM »
Yes. As you said you're getting 0% instead of 7%- selling is a no-brainer.
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Abe

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Re: House paid off, thinking about selling, renting and investing
« Reply #2 on: January 13, 2018, 03:47:59 PM »
If you can get an equivalent place by renting for the same amount, and the market hasn't had egregious rent increases (or better yet has rent control laws preventing large increases in the future), then consider doing so. Keep in mind that the 7% return is not guaranteed. Ask yourself if you'd be OK with renting if the market drops 20% in one year, and had low returns for another 3-4 years. Then ask yourself, what if the rent also went up 3% annually (or whatever the limit for rent control is in your area) during that time.

Sibley

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Re: House paid off, thinking about selling, renting and investing
« Reply #3 on: January 13, 2018, 10:41:42 PM »
If the rental market doesn't make sense for some reason, could you sell your current home and buy a smaller, cheaper one? That would free up some capital for investments, and potentially reduce expenses overall.

johnwpowell

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Re: House paid off, thinking about selling, renting and investing
« Reply #4 on: January 19, 2018, 03:17:36 PM »
Thank you for the feedback.  I think im going for the compromise and planning to sell and get a house in the 300k range and invest the 250k.  I live in a very expensive area...already in a townhome and will have to compromise on something to find one at a lower price