topic Re: Windfall question in Home

Windfall question

Chicagosuburbangirl — Mon, 07 May 2018 00:31:52 GMT

If you received a substantial windfall, do you think it would be a good idea to pay off your mortgage or purchase a rental property in a town that you know and love?

P.S. we would most likely retire to the rental location.

Re: Windfall question

CAcableGirl2 — Mon, 07 May 2018 00:35:16 GMT

Purchase a rental would be my choice. You could always get a monthly income by renting from either location if needed. If you really love the place and it has growth potential get the rental.

Re: Windfall question

TheMemphisVette — Mon, 07 May 2018 00:38:18 GMT

pay off debt. including morgages.

Re: Windfall question

sunshine45 — Mon, 07 May 2018 00:43:10 GMT

i think the answer to a big decision like that may also depend on your ages and other financial background.

Re: Windfall question

sissel — Mon, 07 May 2018 00:47:59 GMT

Can you do both? If not pay off the mortgage . At least you will own your house out right. Pay off any debts before retirement. You are using the money wisely, know some people inherited money brought, jewerly & cars then ended up had to pawn the jewerly & sell the expensive cars, now they have nothing.

Re: Windfall question

froggy — Mon, 07 May 2018 00:49:50 GMT

I would pay off my mortgage 100% of the time. No such thing as "good" debt.

Re: Windfall question

Snowpuppy — Mon, 07 May 2018 00:54:23 GMT

Personally, I'd pay off the mortgage.

Do you have experience in rental properties? I worked at one while I was in college. Are you handy enough to do the maintenance yourself?

It sounds like your ideal property is a distance from you? Who is going to show it, rent it, clean and paint it, screen tenants, etc?

Personally for me, never again.

Re: Windfall question

Kachina624 — Mon, 07 May 2018 01:18:15 GMT

I'd call my financial advisor and inquire as to what income I could expect from investing money. It's possible you could earn a lot more than you're paying in interest on a mortgage if you have a low interest loan.

Re: Windfall question

GCR18 — Mon, 07 May 2018 01:22:46 GMT

Pay off mortgage, invest balance.

Re: Windfall question

Kitlynn — Mon, 07 May 2018 01:23:05 GMT

I would pay off the mortgage and then keep putting the payments in the bank every month. Then when I was ready to retire I would use the money to by the home I really wanted in the area I decided to retire in. Rental property is great if you are there and able to maintain it and do the upkeep. Otherwise it can really be a nightmare to deal with problems and things that go along with rental property.

Re: Windfall question

blackhole99 — Mon, 07 May 2018 01:30:05 GMT

Rental properties are a headache unless you have someone managing them for you. I would pay off current debt with the windfall, sell my place and buy the rental property if I still thought it was a good idea.

Re: Windfall question

kitcat51 — Mon, 07 May 2018 01:31:25 GMT

Get a financial advisor involved, paying off a low interest mortgage isn't a good idea if you can invest the money at a higher rate. Put the money to work for you...good luck & congrats on the windfall.

Re: Windfall question

VaBelle35 — Mon, 07 May 2018 01:37:00 GMT

I would pay off the mortgage and save up for the house for retirement. With the new tax regs, you may not be itemizing anymore, so having the mortgage deduction, etc. now won't benefit you tax wise.

But if you want to buy something now because the price and the interest rates are good and may not be when you retire, then that deserves serious consideration.

Re: Windfall question

Chicagosuburbangirl — Mon, 07 May 2018 01:38:58 GMT

@kitcat51 Thank you so much.

Your thoughts are similar to ours.

Re: Windfall question

software — Mon, 07 May 2018 01:48:47 GMT

I would pay off every penny of debt I have first.

You never know about tomorrow, but I'd rather meet it debt-free

Re: Windfall question

Carmie — Mon, 07 May 2018 02:22:29 GMT

Ask yourself some Important questions. How long do you plan on living in your present home? Five years, ten years....forever?

If you don't plan on spending the rest of your life in that home, why would you consider paying off the mortgage? Do you plan on renting it out in the future?

So do you plan on moving back to the area where you want to buy a rental property? If so, when? If not, why do you want to buy a house there? Do you just want to purchase a rental property for income?

Maybe you want to buy a home in your home town and move into it in future..perhaps,when you're retired. If so, how long do you have until retirement?

Is it your Plan go own two houses and rent one out? Who will manage the rental? Who will do upkeep and fix things when the tenants call. What if tenants ruin the house or do not pay rent and refuse to move out?

Would it be better to just sit on the money until you are sure what you want? If you really knew, you wouldn't be on here asking? Why do you need to spend your money at all?

If you invest some of it, will you be able to access it without paying a penalty?

I know many people are saying, pay off your mortgage, but why pay it off if you do not plan to keeping that house forever, don't tie you're money up in it. People who have money and know how to keep it, don't use their own money to purchase things...they borrow money.They make sure they have liquid assets. No one wants to be house rich and cash poor. Many older folks have their house paid for, but struggle to pay the taxes on it.

Always make sure you don't spend every red cent when you get a windfall. If the bottom falls out of the market again, and you have cash, you will be always to buy cheap. If you buy When properties are high and your tenants destroy..or just use the h home it cause wear and tear, you will spend a fortune remodeling it.

Think long and hard on this...and run it past a financial advisor who will ask you the same questions I posted.

Re: Windfall question

Abrowneyegirl — Mon, 07 May 2018 12:17:44 GMT

@kitcat51 wrote:
Get a financial advisor involved, paying off a low interest mortgage isn't a good idea if you can invest the money at a higher rate. Put the money to work for you...good luck & congrats on the windfall.

This. Getting money is great, making money from 'found money' is Wonderful!

If you do not have a trusted FA look for one who works for a FEE not on commission of what they sell you.

Re: Windfall question

Regal Bee — Mon, 07 May 2018 13:58:47 GMT

@Chicagosuburbangirl A rental property is a good idea if you can do your own repairs. You can make money this way. My husband and I rented two homes for over 25 years and did all the repair work. They were really good investments. If you hire out the work/repairs, it can really eat into your profits.

Re: Windfall question

Mominohio — Mon, 07 May 2018 20:04:21 GMT

I personally have never wanted to own a rental property.

Perhaps it is because we don't have a lot of money, and in our area, the upkeep, taxes etc. can make them a really not so good investment. It would take time, work, effort to maintain another property, and I have all I can do to afford and physically do the work for this one.

That said, many people make good money on rentals and build quite an empire doing so.

I'd consult a good financial planner and see if, for our (your) unique situation, whether paying of existing mortgage or investing the money in some other way would be a better option.

Unless you expect real estate to really soar in the retirement area you are looking to buy (then getting it now might be advantageous), and expect to live in the rental property relatively soon, I'd think twice, unless money is no object in maintaining a second property. So many people think a second property is a good idea, but fail to think of all the things and time and money it takes to support it.

Re: Windfall question

Chicagosuburbangirl — Mon, 07 May 2018 20:48:15 GMT

@Carmie Thank you for your detailed response.

I am asking the community here, because I know some have owned rental properties and wanted to hear their stories.

Also, from experience, comes wisdom. I am sure there are many wise women and men who would like to help me with this question.

Rest assured we are not spendthrifts nor impulsive by any means.

As you can understand I am hesitant to post too much information about my personal finances, just looking to the nice people here to share their stories.

@Regal Bee Very informative, thank you. DH super handy, truly, which we know will be a big plus.