The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: crucialink on August 21, 2014, 07:26:14 PM
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My question is I am paying off my mortgage in a couple months, which will free up $2,000 a month. I am not sure if I should take that $2000 (get a mortgage for 180,000) and buy a condo and rent it out in Florida, put the $2000 into a vanguard REIT or just put it into my vanguard VTSAX. Any suggestions?
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You may have already thought of this / included it in your calculations, but is it "actually" $2000, i.e. the P&I payment was $2000, and you have your tax/insurance costs separated?
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We need more information on your entire balance sheet, the details of the rental, etc. Plans for retirement, need for liquidity before tapping old man money, overall plan.
Sounds like fun
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If you have paid off your own home, I would be less likely to secure a new loan with it. Getting a mortgage on the Condo would be the way I would go. Not that you would lose it but why risk your personal residence for a business venture. I have a friend that built his home with no debt. He then decided to buy a business with a partner using his home to secure the loan. The business went belly up and he is now stuck with a mortgage on his own home that he built without debt. That payment has got to suck for him.
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Mortgaging a condo (especially far from where you live) and renting it out sounds like a potential train wreck.
We need more information about your balance sheet, career, risk tolerance, and aspirations.
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1. Are you maxing your 401(k) or other pretax retirement accounts? If no, do this.
2. Do you have a HDHP? If so, shovel the max into the lowest fee HSA you can find.
3. Are you eligible for a Roth? If so, shovel the max.
Still money left over? THEN you can consider real estate versus taxable investing. The tax advantages of the accounts above radically increase their compounding power.
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Have you considered booze and hookers?
If that's out of the question... do you like your job? Now might be a good time to look around for part time or lower paying (or higher paying!) work you might like.