Long time lurker here, but first time poster. I've got a question for you all.
So, I've been aggressively paying down debt for the past three years, and in about two months I'll finish paying off about $160k in grad school loans. At that point, I'll have a few thousand in cash, about $25k in retirement accounts, and that's about it - with one big exception. I own a piece of land (no mortgage) that's worth somewhere between $135k and $195k. The land is right next to my house in a highly desirable, downtown area of a city, and another house could be built on it. Hence its value.
While paying off my debt, it was tempting to sell the land since that would've been the quick and easy solution. However, I would've had to pay capital gains taxes on the sale due to the fact that I've owned my house and the land for less than 2 years. In a few short months, I will hit the two year mark, and if I sell both my house and the land, I won't have to pay any taxes on the gains due to the principal residence exemption. I plan on doing just that.
Once I sell, I'll have probably $10k in my checking account, plus $100K in equity from the house, and somewhere between $135k and $195k from the land (let's call it $150k), for a grand total of $260k. So my question for you is - what should I do with the cash? I could pay cash for a house, leaving me with about $10k given my house price range. I could put the minimum down on a house and sock the rest away in retirement/index funds. I could buy rental real estate (something I've always wanted to do). Any thoughts?
Other info - I currently make around $110k a year in a medium sized city. Cost of living here is very moderate. My wife was laid off recently and we have a kid, so I'm the sole bread winner.