We live in a multifamily property in Brooklyn with subsidized rent-mortgage about $1200 below market in exchange for managing the property. We have a minority ownership stake in the property from sweat equity, and our investing partner is amenable to us increasing our equity. The property has gone from $1.16 million a dozen years ago to $2 million. I think there will be continued growth but unlikely to match the initial dozen years. I'm wondering if it's a good idea to invest more (100-120k) in the property or better to leave things simple in index funds. On one hand this seems like an easy opportunity to build equity in a very good property. However, I have a more FIRE bent than my spouse and am reluctant to put more liquid money into the property. I would love to FIRE in 10-15 years. Thank you for any thoughts!
We are 40yo with two little kids.
Gross Salary/Wages: 280,000
Married Filing Separately due to PSLF.
Current joint expenses not including school loans: 6900/mo
monthly food/household/travel/other: 1500
childcare: 3000 hopefully going down in 1-2 years
housing: 2400
We are maxing out three retirement funds annually (~54000)
Assets: 793,000 (608,000 retirement, 185,000 nonretirement)
Roth: 107,000
401k: 501,000
non-retirement mutual funds/bonds: 160,000
(above are in 90% index funds and 10% bonds)
Berkshire Hathaway B: 5000
Cash: 20,000
Liabilities: 248,000
School loans
$78,000 balance - $1200/mo, 3%, receive 50% of this refunded from graduate school bc of public service work
$170,000 balance - $790/mo, 7%. Three years left for PSLF program.
No credit card debt.
Property Details:
Market Value: 2 million
Original Purchase price: 1.16 million
Original Mortgage Amount: 930,000
Interest Rate: 4.125
Mortgage Term: 30
Term remaining: 18
Amount remaining on mortgage: 876,000
HELOC matures 2048
(forgive me if details left out, I don't really understand HELOCs)
Principal: 317000
Monthly payment: 1800
APR: 5.125
Current equity for my family is 167,000 (20% of 837000) .
Gross Rents: 98,000 annually
Taxes: 5000 annually
Net Cash Flow: 7000 annually, sometimes annually dispersed to partners
Specific Question(s):
What other questions should we be asking about the property to better evaluate the investment?
Should we put more money into this current investment/home?
If yes, what's a reasonable amount? We were thinking 100-120,000 from the non-retirement funds.
Thank you for any thoughts!!