I'm hoping I can get some opinions on my situation. I don't think there is a 'right' answer to my question but if you have any input or thoughts I'd appreciate it.
About me:
43, married, 2 kids. no debt (including no mortgage)
Assets (wife and me)- primary residence is worth just under 500K. About 500K invested in retirement accounts. Plus cash/emergency stache.
Not included in those numbers is a 1/3 share of a vacation house I own with 2 siblings that we inherited from my parents.
Long story short, I'm trying to decide if I should sell my share of the house to one of my siblings, and if I do, what to do with the money. In order to avoid taxes, and to prepare for retirement, I'd like to do a 1031 Exchange and roll that money into another property that my wife and I can retire to eventually (we want to move to a lower cost of living area when the kids get to college, @10 years). We would rent the new property (probably weekly, but not year round) until then to cover as much of the costs as possible. We are thinking of getting a condo.
My question: in order to buy something appealing to us, while avoiding a (large) loan, I'll need to combine all of my cash/emergency savings with the income from the sale. I don't have the income to contribute to 401K and build up cash reserves (or pay a loan) at the same time. So, I'll need to stop contributing to my 401K (at least for a while) so that I can build up cash or pay a small loan for the new property (I don't think rentals will cover all expenses).
So, would you sell your share of the house, reinvest in real estate, and stop contributing to 401K? Would you sell and simply pay the taxes (yuck)? Would you stick with the share of the current house (there are reasons we'd prefer not to, which I won't bore you with here) so you can keep putting money into 401K/IRA, etc?
With 50% of my net worth invested in the market, I think I could use the new property to diversify but I'm a little gun shy about having so much money tied up in equity with no cash safety net. I also know rental properties come with their own work and headaches....and I've been brainwashed into maxing out my 401K every year!