We're almost through the 1 1/2 year process of subdividing the property our house is on. When it's (finally) done, we'll have our home (which will still have a mortgage), and another vacant piece of property alongside it that we'll own outright.
Our next step is figuring out what to do with this piece of property. It seems like we've got a lot of options, but we can't decide which one is best financially. Hoping y'all can help!
Background:
We live in a resort town that has seen a lot of growth in property prices.
There is a massive amount of investment ongoing in the town.
A piece of property exactly the same size as the new one we're creating sold for about $145k on the same block this past summer.
We owe about $275k on the house.
We've got a car loan that's kind of high interest (7%) but it's only 2 months from being paid off.
We've got other debt, including student loans, that are low interest (3-5%).
SO and I are still working full time, plus 2 children.
We've got a small emergency savings (about $15k).
We've got no retirement savings.
We're in our early 40s.
We earn high 5 figures, nearly 6, annually.
The property is zoned so that there could be 2 single family homes/units on each.
Our current home needs a little work - at least a new roof.
Options:
1. Sell the property now, use some of the profit to replace roof, put the rest in Vanguard fund.
2. Hold the property as an investment.
3. Build a brand new home on the property, sell current home (we'd profit about $50k on sale). New home would cost about $300k here.
4. Sell property, use profit to fix roof and build a garage with a rentable 2-bed apt. on top. (Local rents would give me about $2k monthly).
5. Try to build townhomes on the new property (not sure I can get the loan, because of debt to income ratio) rent them for a while, then eventually sell them.
6. Some other idea I haven't thought of.
One concern of mine here is taxes. I'm not sure if any of these options, or some other option, is going to save me the most there.
Let me know if you need any more details. Thanks!