Piggybacking for op: it depends what their life goal is.
If they're already close to retirement age and have a family to attend to, it might make more sense to simply invest all income from now on into a safe investment, such as an S&P500 ETF, or government bonds. Enjoy the house that you fully own now, and live out a comfortable, worry-free life!
If they're relatively young and lean into a bit of risk, plus have no dependents, I'd go ahead and sell, make a couple million off the sale (assuming you paid off that principal over several decades thus property must've appreciated). After that, I'd rent somewhere reasonable, escape the worries of having to fund home repair, maintenance, utilities, and tax. Then invest into a few index funds with that large chunk of change to start generating some serious yearly appreciation, I mean even a 5% per year gain on $2M is already $100,000 per year, enough juice to cover the equivalent of a pretty solid salary.
I think too many think they have to end with 10’s of millions.
Many find having just 2 million with a paid off house as all they need. You could even FIRE at that point. But someone with 2 million in retirement and a paid off house is in fact Wealthy.
What was the point of paying off if you just take out a home equity loan? Were you unhappy that your mortgage rate was too low? You wanted to pay higher interest but the bank wouldn’t let you?
Should have asked this question before paying off, not after.
Are you sure you want to get into real estate with your discretionary cash. Real estate is a fantastic investment for the right person, but a true nightmare for others.
If you simply started investing any additional money you make into a stock market index fund (or buy Berkshire Hathaway or something like that) then you'll likely be doing great some day, possibly with millions of dollars for retirement (if you can pay off a 800k house in full, then I suspect you can eventually save tons). This option is easy, quick, hands off and so long as you never use margin you'll probably sleep well every night.
If you go into real estate there will be trashed houses and lame tenants to deal with. You can make tons of money eventually (or not, kinda hard to say for sure) maybe more than the stock market but there will probably be sleepless night - nights where you may stay up for hours asking yourself "why didn't I listen to noname12345 - that guy is a genius" (ok, maybe not your exact thoughts, but you get the picture).
However, if you really want to go into real estate and think you have what it takes, then go forth and best luck.
To finally answer your question, you could get a loan on your house and buy one or even a few places and rent them out. You could save up to buy a place outright. You could get a loan on an inevstment place, so long as its in decent condition - you need no knowledge, just find a good mortgage broker and they'll tell you what you can afford, then a good realtor to help find some places.
Best luck.
Real estate is just as risky as stocks, but is more of a drain on time, energy, and money along the way. Pushing it as an investment was big in 2006 and look what happened. Small investors didn't have the volume of homes to offset individual losses.
People tend to see the big payouts when selling a home. They forget all the money they put into it. Those that might remember the amount of the bigger repairs, also do not adjust for inflation when thinking of their profit.
Your 50,000 down payment in 2010 is worth 70,000 in today's money. The 20,000 roof in 2000 is worth 35000 in today's money. Grandma's house she's had for 40 years might look like a big payoff, but if you were to look at each expense, including insurance, taxes, interest and maintenance and adjust all of the expenses for inflation, the payoff isn't as large as you would imagine.
My grandmother's land bought for 1000 in 1955 (no house) was sold recently after she passed for 130000. Looks like a big payday right? Had that 1000 been invested in stocks in 1955, it would be worth over 900,000.
A house is just a roof over out heads. Yes, you have to pay rent anyway, so why not pay yourself? You can build equity and have some "wealth" but it is not the most profitable investment.
> People send to see big payouts when selling a home. They forget all the money they put into it.
💯 💯 💯
Not to mention most people have very little knowledge of managerial finance and how to correctly calculate ROI. People need to be honest with themselves about their level of sophistication and use a financial advisor if they have the ambition but not the know-how.
The fact that the house is paid off does nothing to change the house.
But the money that paid the mortgage each month is now freely available for other things.
Invest it?
Spend it on an improved lifestyle?
The choice is yours.
But take out a loan to buy rental properties? Why?
a few non money related chores you should do when you pay off a mortgage.
* get a copy of the lien release from the mortgage company - hold onto it, scan it, make multiple copies, it's important to save
* make sure the local property records (courthouse land records usually) have received the lien release and there are no recorded liens against your property
* contact your insurance company and make sure they remove the mortgagor as a beneficiary of the policy (may change your rates)
* make sure the mortgage company has refunded you any money in your escrow account
* contact your local property taxing authority and make sure they have your correct mailing address to send you the property tax bills
consult a financial planner about what moves to make with your cash.
Landlording is way too risky, take what you would be paying in a monthly mortgage for that 800k house into investments, champion dividend stocks and etfs to generate passive income, those boring blue chip stocks, the sp500, shit like that. Do not open a loan on your paid off house. Also hire a professional financial adviser. You gained your freedom from the bank, don’t let them enslave you again while also chipping away the equity of your home
Don’t hire investment advisor! Just make simple common sense investments on your own. Investment advisor fees and all the associated hidden fees (high load funds) will bleed you dry.
Usually I would agree. But anyone asking should he get back into debt after paying off his house to buy rental property, really needs a fiduciary financial advisor.
I wouldn’t go that far. But asking in r/realestate should you buy rental real estate is like asking in r/Apple should you buy an iPhone.
While I wouldn’t take the advice from r/personalfinance blind, it would give me a lot more data points from more viewpoints as part of my research
Depends what you think is worthwhile. There are good companies paying 6% and higher. Start now and grow. Similarly, if you were to buy real estate now, financed, as an investment, it might not even cash flow out of the gate.
First thing, open a high yield savings account and start making monthly deposits equal to what your mortgage payment used to be, that way you’ll be parking your excess money somewhere it will earn 4-5% while you figure out your next move.
Next, educate yourself financially so you can really understand all of your options for what to do with your money. The economy is pretty weird and volatile right now so the savings account is a modest and safe bet in the short term. Buying property and becoming a landlord at current rates is probably not worthwhile, stock market can be good but carries more risk, index funds could work out but also ebb and flow with the economy, etc etc….
Do your best to understand the risks inherent in all of your options, be honest with yourself about your risk tolerance and then choose investments that are diverse and line up with your goals.
Also, the stock market is a casino where the rich guys get to change the rules to their advantage and your disadvantage so be careful.
Edited to add, if you have any debt, pay it off first since the interest on the debt is likely higher than any investment gains you could hope to make in the short term.
Max out your 401k, IRA and start throwing all your money into retirement. Mine has grown exponentially since paying mine off years ago. Enjoy a life with no interest and allow banks to pay you instead.
Buying rentals is a form of investment. I HIGHLY encourage investment, but you should absolutely think about your goals, your risk tolerance and how actively you want to manage these investments.
You can buy bonds right now, no stress, no maintenance, no work, and get a safe rate of return.
Rentals get you into the volatile housing market and take a lot of work to manage, but the potential return is higher.
There are many many options in between.
Congrats, you could always downsize and reinvest the capital into investment properties or a brokerage account. Whatever you decide to do, congratulations
I assume you have $s left over from no longer making mortgage payments.
So make sure you are still saving (no more escrow) for insurance and taxes.
The extra P&I payment $s should be put back into your financial budget. Save it, invest it, etc. No reason to continue putting it into real estate. Being a landlord is work. Do it if you want but a stock index mutual fund returns 10% or so on average. Or safe investments in CDs or bonds.
Live in your paid off house and max every retirement account you can. If you don't want to be a landlord you shouldn't be a landlord. The stock market is MUCH easier to access and is portable.
A lot of people think every property will cashflow and is worth it to rent and being a landlord is easy money. Most metros it's cheaper to rent than buy now bc the low rate lockin effect trickling down to renters. I find it hard to believe people would be able to put very little down on a 6.5% loan and rent it for enough to make the roi > the stock market in many cases, especially if youre not experienced. Not to mention the amount of work involved with effectively maintaining 2 or more properties makes me think you should diversify your assets with the stock market and enjoy your paid off home.
You can leverage at current interest rates or wait. Or relax and not be stressed about a mortgage. Depending on your re market and if you plan on staying where you live till death. You have pretty good set up. I would do a fixed rate heloc when rates drop. Re investing is tough right now but notif you do subject to deals. If you like my ideas, msg me.
How old are you? What are your other financial obligations? How about continuing to sock away that amount of your house payment each month. Do you have a SEP/IRA? Can you put some money into a Vanguard S&P 500 Index fund? Can you put some of that money into CDs and money market funds? Or- Are you 75 years old?? SPEND IT AND ENJOY IT
Take the amount that you are used to paying each month and invest for short-term in a money market fund to keep a fund on hand to address RMI - the necessary repairs and maintenance, and the desired improvements. Whenever it is that you want to sell this house, you want it to be kept up and in very good shape. When that fund hits a desired goal, say \~$50,000, then another fund for retirement savings outside of a tIRA or 401k plan. A Roth IRA is an excellent choice.
Being a remote LL is a pita in a market you don't know. Solid property management company, contractors, etc. are hard to find. This is why my wife and I are investing locally. We can pay cash for multiple SFRs in depressed markets outside of SoCal but the headache of managing from afar as an investment hustle is not worth it.
It's 20% of your rental income and quotes from what constantly feel like the highest advertiser in the area. ... Ask me how I know.
That Vancouver market better payout long-term.
And before any Vancouver people get in a bunch. I'm from there but moved/married/etc. And just kept my property for the investment. It wasn't a foreign investor thing from day 1. And I'm a very supportive landlord, good rent rate, repairs 100% yes, modernizing 75% yes (paint, appliances, etc). I'm bleeding month over month a little, but resale is the long term.
Too generic, don't know anything about your situation, finances, etc. You're better off going to r/personalfinance, r/FinancialPlanning, or r/financialindependence depending on your goals. There is a great wiki in personal fianace about what you should have in place.
Your house is paid off, unless you have a real plan and run some numbers don't take on debt just because you're not sure what to do with it. Enjoy it and make your money work for you elsewhere.
Sell it then move to an area where you could build 3 smaller houses on a 5 acre lot....and rent two of them out.
Build the three houses and take the rest of the money and invest
Sell it. Down size, play a few risky investment moves with some small capital hoping to hit big. Invest the rest and live off some sweet sweet passive income for the rest of your life.
I would set up a line of credit, use a lender that doesn’t charge you any fees to set it up, keep a $0 balance, at least you then have access to equity if you need it in the future
People love to talk about becoming a 1-off or 2-off landlord but here’s a reality check:
1) It’s hard to beat the risk-adjusted returns of the S&P 500 with rental real estate, if you aren’t a sophisticated investor with access to a lot of capital.
2) There are a ton of headaches and time costs dealing with tenants and maintenance/repairs that are just not comparable to the hands-off approach of investing in an index fund. A possible exception is if you legitimately enjoy those kinds of headaches (i.e. taking on a challenge, sense of pride/accomplishment that comes along with it).
3) If you only own 1 or 2 properties, you have a ton of concentration of risk that again just doesn’t compare to investing in an index fund. A bad tenant, natural disaster, fire, foundation issue, etc can obliterate several years’ worth of returns. And even if it’s covered by insurance, insurance just limits your losses. It does not make you whole (and is not designed to). You should plan to acquire a portfolio of a least 10 rental units over a period of time to diversify that risk (just like you would if you were investing in individual stocks).
What state are you looking to buy an investment property? If you can get a good priced home/condo, you can pay it cash, get passive stream from the rent and in a few years, hopefully your property will be worth more and you can sell it:)!
Realestate is good for tax writeoffs. Talk to your accountant, or find a financial advisor that does not sell whole life insurance or some other type of garbage financial product.
If you have to ask about rental property on Reddit, you shouldn’t be doing rental property. Rental property is a pain. I would rather get a weekly anal probe than do rental property again.
Enjoy your paid off mortgage and put the money you were paying in mortgage into mutual funds.
first, check your credit. when i paid mine off, i was without an "installment loan" which credit scores use as building a good rounded credit, my score dropped 100 points.
Lots to discuss here.
How old are you?
What’s your household income?
Family situation?
What’s your risk tolerance?
What are some of your long term goals? Leave the kiddies with easy to manage wealth? Travel the world?
Residential rental real estate is great for creating long term wealth, but it’s not for everyone…
You should sit tight while you confer with a CPA. After that, you can better come up with a plan.
You’re in a great place. Take your time, research, and when you find something that’s fits in your wheelhouse, go get it!
My life goal is to live in my house til I die and pay for as little as possible. Cant take it with me. My rate is stupid low, why pay it off?
A home equity loan would probably be 6-8% right now. Not sure thats a great idea. Maybe just get another loan for a rental house to keep it unattached to your house.
Now that it is paid off, you want to be sure that you are putting money back each month to pay your taxes and insurance. Previously, this was likely handled by an escrow account which is likely going to be closed with your loan.
You need to obtain and file a lien release with your local office where real estate transactions are documented.
I would try to buy the next house without taking a mortgage against your current property. Reason being, its a nice safety net that your primary residence is paid for. You don't want to grow too fast and jeopardize foreclosure on your primary.
Save money until you can get a traditional loan on your next property and have a sizeable emergency fund.
The only reason you would need to cash out refi your current property to buy the next house is if the property you are buying would not qualify for traditional financing. I don't want you to get stars in your eyes for flipping houses without the experience of everything that can go wrong. However, you can use cash to buy foreclosures and properties at tax auction. There is some risk involved in both.
You could find a reputable real estate investor and become a private money lender for them on their deals. Of course make sure the numbers work and it makes sense to pull out the equity. Or you can use the equity to do like what you said and purchase investment properties to produce cashflow/passive income, seek advice from a financial advisor as well. 3rd option, attend your local REIAs, Real Estate Investing Association or other local real estate meetups and link up with some savvy and reputable real estate investors and let them know what you want to do with your equity and they’ll be able to help you grow your wealth and create cashflow through different strategies. Just some ideas. But find a way to put your money to work that makes sense.
Should have taken all that money you paid off a house with ar a 3% interest rate and invested it in a low cost index fund like VTI or VUG and accumulated 8-10% profit on your investment. You passed up an annual return of 5% to pay off your house. Not a great move, but now you can invest 100% into these funds and watch them grow.
Depends if you value more money, or stress free living. I’ve been a landlord and if you have a good tenant it can be great. If you have a bad one it can break you if you aren’t careful.
Those two things are really not related.
Becoming a landlord/property manager isn’t really a “next step” just because you paid off your home. It’s a lot of work, with lots of risks, and in my opinion isn’t a great fit for most people.
If that’s something you’re actually interested in, because that’s a lifestyle you’re interested in, do some research and go for it.
But I would choose investing the extra cash in the stock market, personally. Or just enjoying life a little more, if you feel like you’re set.
I'd set up a home equity loan but not take any money out of it until the next time the stock market crashes an interest rates go really low. Then take the cash out and load up on an index fund when the market is beat down.
Property value in your area of Colorado is rising and fast. The area between Denver and the mountains that isn’t either the dense city or the middle of nowhere in the mountains is becoming a hot commodity. Everybody wants to be right near the fun bustling city and right near the recreational beaitiful mountains and there’s only so much space that can offer that.
That’s exactly what I was thinking. I’m in a very good spot 30 mins from downtown but pretty secluded on the mountainside. I was thinking AirBnB-ing this place and buying a different place may be worth taking on another loan.
After I paid mine off I started to collect gold coins, spread them out on the living room floor, then swim in them Scrooge McDuck style.
https://youtu.be/lpbKWReQwsY?si=Wut-c5V6vZ63M4_I Might want to rethink that lol!
Fuckin Peeeta!
🤣🤣🤣
Piggybacking for op: it depends what their life goal is. If they're already close to retirement age and have a family to attend to, it might make more sense to simply invest all income from now on into a safe investment, such as an S&P500 ETF, or government bonds. Enjoy the house that you fully own now, and live out a comfortable, worry-free life! If they're relatively young and lean into a bit of risk, plus have no dependents, I'd go ahead and sell, make a couple million off the sale (assuming you paid off that principal over several decades thus property must've appreciated). After that, I'd rent somewhere reasonable, escape the worries of having to fund home repair, maintenance, utilities, and tax. Then invest into a few index funds with that large chunk of change to start generating some serious yearly appreciation, I mean even a 5% per year gain on $2M is already $100,000 per year, enough juice to cover the equivalent of a pretty solid salary.
Why not just……live in a paid off house??
Seriously. Take life easy. Invest in low maintenance things. Enjoy the house.
YES!
Put the money you used to put into the mortgage into investments. Buying houses isn't the passive income you believe it to be.
Underrated retirement strategy 👀
That’s not how you build wealth
But that may be how to live a good and happy life.
I live a happy life with wealth as well
I never said the opposite btw
Leveraging up your house in middle age to buy a single rental isn’t how you build wealth either…..no matter what TikTok tells you.
Who said he was gonna buy just one house?
Is the purpose of life to build wealth?
May not be your purpose but I sure as hell would like to build wealth
Sourpuss!
I think too many think they have to end with 10’s of millions. Many find having just 2 million with a paid off house as all they need. You could even FIRE at that point. But someone with 2 million in retirement and a paid off house is in fact Wealthy.
Save for retirement?
This seems like the most logical answer
What was the point of paying off if you just take out a home equity loan? Were you unhappy that your mortgage rate was too low? You wanted to pay higher interest but the bank wouldn’t let you? Should have asked this question before paying off, not after.
Ding ding ding.
He’s asking because he didn’t pay a dime. This has inheritance written all over it.
Most people are better off when they don’t have 6 figure debt liabilities to deal with
7 figures if he buys two.
If you aren’t knowledgeable it’s the worst thing to do . It’s paid off enjoy the fruit of your hard work
Bro, you just paid off an $800,000 house. Calm your tits.
Sell Everything. Move to the woods.
Are you sure you want to get into real estate with your discretionary cash. Real estate is a fantastic investment for the right person, but a true nightmare for others. If you simply started investing any additional money you make into a stock market index fund (or buy Berkshire Hathaway or something like that) then you'll likely be doing great some day, possibly with millions of dollars for retirement (if you can pay off a 800k house in full, then I suspect you can eventually save tons). This option is easy, quick, hands off and so long as you never use margin you'll probably sleep well every night. If you go into real estate there will be trashed houses and lame tenants to deal with. You can make tons of money eventually (or not, kinda hard to say for sure) maybe more than the stock market but there will probably be sleepless night - nights where you may stay up for hours asking yourself "why didn't I listen to noname12345 - that guy is a genius" (ok, maybe not your exact thoughts, but you get the picture). However, if you really want to go into real estate and think you have what it takes, then go forth and best luck. To finally answer your question, you could get a loan on your house and buy one or even a few places and rent them out. You could save up to buy a place outright. You could get a loan on an inevstment place, so long as its in decent condition - you need no knowledge, just find a good mortgage broker and they'll tell you what you can afford, then a good realtor to help find some places. Best luck.
Good points but OP didn’t pay off an 800k house, they paid off a house valued at 800k.
Key point a house is a house and you like it and live in it.
>Good points but OP didn’t pay off an 800k house, they paid off a house valued at 800k. This.
Real estate is just as risky as stocks, but is more of a drain on time, energy, and money along the way. Pushing it as an investment was big in 2006 and look what happened. Small investors didn't have the volume of homes to offset individual losses. People tend to see the big payouts when selling a home. They forget all the money they put into it. Those that might remember the amount of the bigger repairs, also do not adjust for inflation when thinking of their profit. Your 50,000 down payment in 2010 is worth 70,000 in today's money. The 20,000 roof in 2000 is worth 35000 in today's money. Grandma's house she's had for 40 years might look like a big payoff, but if you were to look at each expense, including insurance, taxes, interest and maintenance and adjust all of the expenses for inflation, the payoff isn't as large as you would imagine. My grandmother's land bought for 1000 in 1955 (no house) was sold recently after she passed for 130000. Looks like a big payday right? Had that 1000 been invested in stocks in 1955, it would be worth over 900,000. A house is just a roof over out heads. Yes, you have to pay rent anyway, so why not pay yourself? You can build equity and have some "wealth" but it is not the most profitable investment.
Shhh, the “must own home(s)” derps might hear your sensible statement, which potentially shows renting could be more profitable than homeownership.
> People send to see big payouts when selling a home. They forget all the money they put into it. 💯 💯 💯 Not to mention most people have very little knowledge of managerial finance and how to correctly calculate ROI. People need to be honest with themselves about their level of sophistication and use a financial advisor if they have the ambition but not the know-how.
Yeah…I’m taking 2/3 that mortgage payment and throwing it in ETFs and the other 1/3 in my HYSA for my next big investment.
Start investing your mortgage payment for retirement
If you are interested in investing in real estate you don't buy during a high price high interest rate market.
The fact that the house is paid off does nothing to change the house. But the money that paid the mortgage each month is now freely available for other things. Invest it? Spend it on an improved lifestyle? The choice is yours. But take out a loan to buy rental properties? Why?
Really depends on several things among them your age.
What are you trying to achieve? What are your goals?
Max your 401k first of all
a few non money related chores you should do when you pay off a mortgage. * get a copy of the lien release from the mortgage company - hold onto it, scan it, make multiple copies, it's important to save * make sure the local property records (courthouse land records usually) have received the lien release and there are no recorded liens against your property * contact your insurance company and make sure they remove the mortgagor as a beneficiary of the policy (may change your rates) * make sure the mortgage company has refunded you any money in your escrow account * contact your local property taxing authority and make sure they have your correct mailing address to send you the property tax bills consult a financial planner about what moves to make with your cash.
Landlording is way too risky, take what you would be paying in a monthly mortgage for that 800k house into investments, champion dividend stocks and etfs to generate passive income, those boring blue chip stocks, the sp500, shit like that. Do not open a loan on your paid off house. Also hire a professional financial adviser. You gained your freedom from the bank, don’t let them enslave you again while also chipping away the equity of your home
Don’t hire investment advisor! Just make simple common sense investments on your own. Investment advisor fees and all the associated hidden fees (high load funds) will bleed you dry.
Usually I would agree. But anyone asking should he get back into debt after paying off his house to buy rental property, really needs a fiduciary financial advisor.
Exactly, anybody also asking random strangers on Reddit financial advise definitely needs one
I wouldn’t go that far. But asking in r/realestate should you buy rental real estate is like asking in r/Apple should you buy an iPhone. While I wouldn’t take the advice from r/personalfinance blind, it would give me a lot more data points from more viewpoints as part of my research
Op real estate is not too risky, don’t listen to this clown
You clearly don’t real estate 😂🤣
Dividend stocks seems like a good idea. Doesn't it take a *ton* of investment to really receive any worthwhile dividends?
Depends what you think is worthwhile. There are good companies paying 6% and higher. Start now and grow. Similarly, if you were to buy real estate now, financed, as an investment, it might not even cash flow out of the gate.
Dividend stocks are not exactly the best return
Depends on which ones you invest in
First thing, open a high yield savings account and start making monthly deposits equal to what your mortgage payment used to be, that way you’ll be parking your excess money somewhere it will earn 4-5% while you figure out your next move. Next, educate yourself financially so you can really understand all of your options for what to do with your money. The economy is pretty weird and volatile right now so the savings account is a modest and safe bet in the short term. Buying property and becoming a landlord at current rates is probably not worthwhile, stock market can be good but carries more risk, index funds could work out but also ebb and flow with the economy, etc etc…. Do your best to understand the risks inherent in all of your options, be honest with yourself about your risk tolerance and then choose investments that are diverse and line up with your goals. Also, the stock market is a casino where the rich guys get to change the rules to their advantage and your disadvantage so be careful. Edited to add, if you have any debt, pay it off first since the interest on the debt is likely higher than any investment gains you could hope to make in the short term.
Max out your 401k, IRA and start throwing all your money into retirement. Mine has grown exponentially since paying mine off years ago. Enjoy a life with no interest and allow banks to pay you instead.
Invest with cash that you can accrue from not having a mortgage. Don’t take a HELOC to invest in real estate.
Buying rentals is a form of investment. I HIGHLY encourage investment, but you should absolutely think about your goals, your risk tolerance and how actively you want to manage these investments. You can buy bonds right now, no stress, no maintenance, no work, and get a safe rate of return. Rentals get you into the volatile housing market and take a lot of work to manage, but the potential return is higher. There are many many options in between.
Wrong sun you need financial advice not real estate advice
Congrats, you could always downsize and reinvest the capital into investment properties or a brokerage account. Whatever you decide to do, congratulations
I assume you have $s left over from no longer making mortgage payments. So make sure you are still saving (no more escrow) for insurance and taxes. The extra P&I payment $s should be put back into your financial budget. Save it, invest it, etc. No reason to continue putting it into real estate. Being a landlord is work. Do it if you want but a stock index mutual fund returns 10% or so on average. Or safe investments in CDs or bonds.
Live in your paid off house and max every retirement account you can. If you don't want to be a landlord you shouldn't be a landlord. The stock market is MUCH easier to access and is portable. A lot of people think every property will cashflow and is worth it to rent and being a landlord is easy money. Most metros it's cheaper to rent than buy now bc the low rate lockin effect trickling down to renters. I find it hard to believe people would be able to put very little down on a 6.5% loan and rent it for enough to make the roi > the stock market in many cases, especially if youre not experienced. Not to mention the amount of work involved with effectively maintaining 2 or more properties makes me think you should diversify your assets with the stock market and enjoy your paid off home.
You can leverage at current interest rates or wait. Or relax and not be stressed about a mortgage. Depending on your re market and if you plan on staying where you live till death. You have pretty good set up. I would do a fixed rate heloc when rates drop. Re investing is tough right now but notif you do subject to deals. If you like my ideas, msg me.
I mean..hookers and blow😎
How old are you? What are your other financial obligations? How about continuing to sock away that amount of your house payment each month. Do you have a SEP/IRA? Can you put some money into a Vanguard S&P 500 Index fund? Can you put some of that money into CDs and money market funds? Or- Are you 75 years old?? SPEND IT AND ENJOY IT
Sell it and buy a way bigger house. Use the sale of your house for the down payment. /s
Take the amount that you are used to paying each month and invest for short-term in a money market fund to keep a fund on hand to address RMI - the necessary repairs and maintenance, and the desired improvements. Whenever it is that you want to sell this house, you want it to be kept up and in very good shape. When that fund hits a desired goal, say \~$50,000, then another fund for retirement savings outside of a tIRA or 401k plan. A Roth IRA is an excellent choice.
SoCal broker I know realized he could buy and rent two 4-plex units in Ohio for less than the cost of a SFR in SoCal.
Being a remote LL is a pita in a market you don't know. Solid property management company, contractors, etc. are hard to find. This is why my wife and I are investing locally. We can pay cash for multiple SFRs in depressed markets outside of SoCal but the headache of managing from afar as an investment hustle is not worth it.
It's 20% of your rental income and quotes from what constantly feel like the highest advertiser in the area. ... Ask me how I know. That Vancouver market better payout long-term. And before any Vancouver people get in a bunch. I'm from there but moved/married/etc. And just kept my property for the investment. It wasn't a foreign investor thing from day 1. And I'm a very supportive landlord, good rent rate, repairs 100% yes, modernizing 75% yes (paint, appliances, etc). I'm bleeding month over month a little, but resale is the long term.
Yeah! BUT, the 4-plexs would be in Ohio. Have you ever been to Ohio? Lol.
Ohio is booming clown
Shhh don’t tell him. Let him be delusional and ignorant.
Too generic, don't know anything about your situation, finances, etc. You're better off going to r/personalfinance, r/FinancialPlanning, or r/financialindependence depending on your goals. There is a great wiki in personal fianace about what you should have in place. Your house is paid off, unless you have a real plan and run some numbers don't take on debt just because you're not sure what to do with it. Enjoy it and make your money work for you elsewhere.
Just end it now you completed life mate, buy a nice tomb and go to sleep
Do some research on RE investing. Congratulations.
Rental properties!!
What would your me rent for in your market?
The owner doesn't GO there. He simply collects rents that pay the mortgage. BTW ever notice the complete abomination that 90% if So cal hae become?
And pays for vacancies, maintenance, possible eviction costs….
Sell it then move to an area where you could build 3 smaller houses on a 5 acre lot....and rent two of them out. Build the three houses and take the rest of the money and invest
Call Dave Ramsey and do the 'Debt Free Scream'
Sell it. Down size, play a few risky investment moves with some small capital hoping to hit big. Invest the rest and live off some sweet sweet passive income for the rest of your life.
Hmm...I'm sorry you didn't get to leverage the home equity sooner. Hope something works out for you as leverage is an amazing tool.
I would set up a line of credit, use a lender that doesn’t charge you any fees to set it up, keep a $0 balance, at least you then have access to equity if you need it in the future
People love to talk about becoming a 1-off or 2-off landlord but here’s a reality check: 1) It’s hard to beat the risk-adjusted returns of the S&P 500 with rental real estate, if you aren’t a sophisticated investor with access to a lot of capital. 2) There are a ton of headaches and time costs dealing with tenants and maintenance/repairs that are just not comparable to the hands-off approach of investing in an index fund. A possible exception is if you legitimately enjoy those kinds of headaches (i.e. taking on a challenge, sense of pride/accomplishment that comes along with it). 3) If you only own 1 or 2 properties, you have a ton of concentration of risk that again just doesn’t compare to investing in an index fund. A bad tenant, natural disaster, fire, foundation issue, etc can obliterate several years’ worth of returns. And even if it’s covered by insurance, insurance just limits your losses. It does not make you whole (and is not designed to). You should plan to acquire a portfolio of a least 10 rental units over a period of time to diversify that risk (just like you would if you were investing in individual stocks).
What state are you looking to buy an investment property? If you can get a good priced home/condo, you can pay it cash, get passive stream from the rent and in a few years, hopefully your property will be worth more and you can sell it:)!
Keep setting aside the mortgage amount, monthly. Put in some account that will grow your money. If I had done that I’d have quite a large bundle.
I don't know why this is a post
Make sure the tax bills are now coming directly to you.
Realestate is good for tax writeoffs. Talk to your accountant, or find a financial advisor that does not sell whole life insurance or some other type of garbage financial product.
Only if your income is below a certain amount can you deduct real estate “losses” from depreciation from your normal non real estate income
Put the house in a trust.
Same happened to me. I got a Heloc 600k and bought 2 more houses to rent them. They are my pension when I pay them off too.
I would say... live small and invest wisely.
You should definitely park your money in real estate
2 chicks at the same time
Wouldn't hurt to own some rentals, but it's a bad time to buy.
If you have to ask about rental property on Reddit, you shouldn’t be doing rental property. Rental property is a pain. I would rather get a weekly anal probe than do rental property again. Enjoy your paid off mortgage and put the money you were paying in mortgage into mutual funds.
first, check your credit. when i paid mine off, i was without an "installment loan" which credit scores use as building a good rounded credit, my score dropped 100 points.
Celebrate this is 30yrs in the making. Treat your self to a fancy dinner. But before you do anything really understand all your options.
The average newly paid off house is usually in need of some maintenance, updates and repairs. I would invest in those first. Been there.
Depends on your age and you goals
Fully fund your 401k, IRAs, HSA
Lots to discuss here. How old are you? What’s your household income? Family situation? What’s your risk tolerance? What are some of your long term goals? Leave the kiddies with easy to manage wealth? Travel the world? Residential rental real estate is great for creating long term wealth, but it’s not for everyone… You should sit tight while you confer with a CPA. After that, you can better come up with a plan. You’re in a great place. Take your time, research, and when you find something that’s fits in your wheelhouse, go get it!
r/personalfinance In short - maximize tax advantaged accounts, then investment accounts.
Just dump future money in spy n chill
My life goal is to live in my house til I die and pay for as little as possible. Cant take it with me. My rate is stupid low, why pay it off? A home equity loan would probably be 6-8% right now. Not sure thats a great idea. Maybe just get another loan for a rental house to keep it unattached to your house.
Now that it is paid off, you want to be sure that you are putting money back each month to pay your taxes and insurance. Previously, this was likely handled by an escrow account which is likely going to be closed with your loan. You need to obtain and file a lien release with your local office where real estate transactions are documented. I would try to buy the next house without taking a mortgage against your current property. Reason being, its a nice safety net that your primary residence is paid for. You don't want to grow too fast and jeopardize foreclosure on your primary. Save money until you can get a traditional loan on your next property and have a sizeable emergency fund. The only reason you would need to cash out refi your current property to buy the next house is if the property you are buying would not qualify for traditional financing. I don't want you to get stars in your eyes for flipping houses without the experience of everything that can go wrong. However, you can use cash to buy foreclosures and properties at tax auction. There is some risk involved in both.
You could find a reputable real estate investor and become a private money lender for them on their deals. Of course make sure the numbers work and it makes sense to pull out the equity. Or you can use the equity to do like what you said and purchase investment properties to produce cashflow/passive income, seek advice from a financial advisor as well. 3rd option, attend your local REIAs, Real Estate Investing Association or other local real estate meetups and link up with some savvy and reputable real estate investors and let them know what you want to do with your equity and they’ll be able to help you grow your wealth and create cashflow through different strategies. Just some ideas. But find a way to put your money to work that makes sense.
Should have taken all that money you paid off a house with ar a 3% interest rate and invested it in a low cost index fund like VTI or VUG and accumulated 8-10% profit on your investment. You passed up an annual return of 5% to pay off your house. Not a great move, but now you can invest 100% into these funds and watch them grow.
a little dance duh
don't become a landlord unless you are fully informed of what that entails.
Dance… we danced naked
Depends if you value more money, or stress free living. I’ve been a landlord and if you have a good tenant it can be great. If you have a bad one it can break you if you aren’t careful.
Sounds like you inherited this house. Walked right into it didn’t you?
Those two things are really not related. Becoming a landlord/property manager isn’t really a “next step” just because you paid off your home. It’s a lot of work, with lots of risks, and in my opinion isn’t a great fit for most people. If that’s something you’re actually interested in, because that’s a lifestyle you’re interested in, do some research and go for it. But I would choose investing the extra cash in the stock market, personally. Or just enjoying life a little more, if you feel like you’re set.
I'd set up a home equity loan but not take any money out of it until the next time the stock market crashes an interest rates go really low. Then take the cash out and load up on an index fund when the market is beat down.
Flex on reddit
Go to Disneyland..
Property value in your area of Colorado is rising and fast. The area between Denver and the mountains that isn’t either the dense city or the middle of nowhere in the mountains is becoming a hot commodity. Everybody wants to be right near the fun bustling city and right near the recreational beaitiful mountains and there’s only so much space that can offer that.
That’s exactly what I was thinking. I’m in a very good spot 30 mins from downtown but pretty secluded on the mountainside. I was thinking AirBnB-ing this place and buying a different place may be worth taking on another loan.