The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Maya on January 11, 2015, 11:34:04 AM
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Curious what everyone would do with 150k from a the sale of a rental property.
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Invest it. Of course that leads to the question "invest it in what?". Need more information about your situation to give specifics. Common generalities would include
- maximize any tax-advantaged accounts available to you and use this cash for living expenses if your normal cash flow precludes the tax-advantaged investments.
- invest in another rental if you are comfortable with that. But if you are selling because you don't like being a landlord this wouldn't be good.
- Etc.
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Are you already maxing out all non-taxable accounts?
If you gave me $150k today I would buy $70K VTSAX, $20K VGSLX and $60K VGHAX
VTSAX- Total Stock Market Fund Admiral shares - (Min $10K) - My go to..
VGSLX - REIT Admiral Shares - (Min $10K) - not the best for taxes but great payments / delayed 1099-Div paperwork by 1 month
VGHAX - Health Care Admiral Shares - (Min $50K) - Risky.. but loved the returns last year and I am letting it ride.
I like to start with more than the min (small wiggle room) in case the market does go down to prevent me from being forced into the non-admiral shares.
If you put these into a taxable account, and returns were roughly the same as last year, be ready to pay a significant amount in taxes due to dividends and disbursements (if you want to reinvest all payments).
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Is this net of any expected gain taxes and depreciation recapture from sale?
Regardless, of whatever amount is left, I'd invest the majority of it. RE is good diversification for many people... it's debatable whether that means physical RE, RE stocks, or other assets tied to RE, but I'll leave that choice up to you.
To keep some RE exposure, I may put 25-50% of that toward some RE stocks (REITs, builders, developers, etc) or even a sector ETF.
Do you any intended use of the funds within 5 years?