Author Topic: What to do with the cash after selling our rental?  (Read 909 times)

Credaholic

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    • Credaholic
What to do with the cash after selling our rental?
« on: May 16, 2016, 04:10:17 PM »
With the real estate market in our parts booming, we decided to unload our rental house. Now we're sitting on some cash and wondering what the smartest moves for it are.

Our current debt:
$400K mortgage at 3.75% (30 year)
$50K renovation loan at 4.5% (15 year)

We need to set aside money for taxes Where should we park this? Is an index fund too risky? Money market?

We are trying to decide whether it would be a good investment to refinance into a 15 year mortgage at 3%. If we did this, we are thinking about paying off the renovation loan to help ease our monthly burden. We currently pay $500/month (which will actually pay it off a bit sooner than 15 years) and the difference between our current 30 year mortgage payment and a 15 year payment is $900. That extra $900 for 15 years would save us $333,442.80 over the next 15 years.

Or are there smarter places for the money? Stock market? Put it back into real estate that cash flows better?

prognastat

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Re: What to do with the cash after selling our rental?
« Reply #1 on: May 16, 2016, 04:30:49 PM »
There are multiple options and you will probably get 3 types of responses here.

1. Invest all of it since it is likely your investments will on average outperform the loss of your sub 5% loans.
2. Pay off the 4.5% loan and invest the rest, this is probably what i would do myself.
3. Pay it all off. This would not mathematically be the best one, but some people really like the feeling of owning their house.