selling rental properties - WWYD with the money?

[TheBeeKeeper]

Decided it's a good time to get out of the landlording gig. The housing market is great for sellers, and all our tenants are moving out soon. After expenses and tax will probably net 450K.
Primary residence is worth 400K with about 200K 4.25% mortgage 25 years left. Was planning to pay off the mortgage which would free up about 12K per year.
Another option is to refinance, can get 3.25%, but I'm inclined not to since we want to move in 2-3 years.

Anyway, we will have 250K$ left. Where would you invest it? we have at least another 5 years until completely FIREd.
Currently, both my spouse and I have 401Ks that have traditional and Roth options, and Roth IRAs. We almost max both most years, so even after maxing all accounts this year + maxing 529s (we get state tax deduction so it's worth it) we can still have about 200K to invest.

[Halfsees]

I'm in almost the exact same place as you and asked a similar question yesterday 😁 We have 250k in an online savings account from the sale of an inherited house back in October and I'm thinking now is the time to invest it in the market? I was thinking of putting a few thousand dollars every couple of days/week into a regular brokerage account (we too have mostly maxed or tax advantaged accounts) to Dollar Cost Average and not give myself a heart attack in this volatile market. I'd probably do VTSAX and VGTSX. The difference between you and I is that our FIRE timeline is 15 years instead of 5, so I'm thinking all equities for us for this lump of cash.

I have no idea if my idea is good or not. I've never had an opportunity like this before and so need to seek guidance as well.

[Mighty-Dollar]

Things to keep in mind with real estate is that gains are taxed at a higher rate, the ordinary income rate if I'm not mistaken.

Also, if you sell real estate at a sizeable capital gain then that gain will be taxed in just one tax year. This compares with other investments like stocks, bond and ETF's in which you can sell in parts spread out over several years, thus lowering your tax bracket.

Crunch the numbers are find out if you would do better with traditional investing in a total stock market index fund and a total bond market index fund. Real estate in general is actually more volatile that stocks. https://www.mfs.com/content/dam/mfs-enterprise/mfscom/sales-tools/sales-ideas/mfsvp_20yrsb_fly.pdf

[TheBeeKeeper]

Things to keep in mind with real estate is that gains are taxed at a higher rate, the ordinary income rate if I'm not mistaken.

Also, if you sell real estate at a sizeable capital gain then that gain will be taxed in just one tax year. This compares with other investments like stocks, bond and ETF's in which you can sell in parts spread out over several years, thus lowering your tax bracket.

Crunch the numbers are find out if you would do better with traditional investing in a total stock market index fund and a total bond market index fund. Real estate in general is actually more volatile that stocks. https://www.mfs.com/content/dam/mfs-enterprise/mfscom/sales-tools/sales-ideas/mfsvp_20yrsb_fly.pdf

selling of the RE is not the quesion, it will be sold this year regardless of tax or whether we would make more money compared to the stock market. Just want to get out of landlording :-)

[TheBeeKeeper]

I guess my question here is would you pay off a 200k mortgage and invest the rest,
or keep some/all of the mortgage and invest 450K.
Current rate is 4.25%, can refinance at 3-3.25%