The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: windinthewillows on December 28, 2014, 05:47:53 PM
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I owe about $150k on a good rental property. Currently it is slightly cash-flow positive. I have a plan to pay off this mortgage in 6-8 years. Once the mortgage is paid off, the goal would be to take 100% of the rental profits ($12k/yr) to counteract my wife stopping working full-time.
OR, would it be better to put this same amount of money towards my Betterment acct for retirement, while paying my normal, low-interest rate mortgage on the above rental property?
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Depends on the specific numbers on the property and what kind of investment return you assume. Read the sell vs rent sticky and edit your post with details. In general if you have a low rate mortgage paying it off early is not in you best interest but it really does depend on the numbers and your situation.
W
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Honestly it REALLY depends on your goals. Long term cash flow allow for early retirement. Strong acquisition though makes even more cash flow long term. So you need to balance where you are acquisition or maintenance/pay off. Only you know that!
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Are you keeping a decent amount liquid for house repairs? Could compromise and do both- you can put enough in a Roth IRA to cover expenses that might come up (like a new roof?) since you can withdraw contributions (or change your mind about your decision). Are your IRAs maxed? Please do post numbers as walt says. Without knowing specifics, I guess I'd say keep the mortgage if it's under 4 or 4.5%. If it's higher than that, pay it down more aggressively. There are all kinds of calculators out there (like this one (http://www.daveramsey.com/article/mortgage-calculator/lifeandmoney_realestate#/advanced_entry_form))/ Then you can compare the mortgage interest that you save versus your anticipated return on your retirement investments. That will help you to decide.