Paid off Mortgage

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Topic Author
socalindex
Posts: 15
Joined: Tue Apr 14, 2020 12:51 pm

Paid off Mortgage

Post by socalindex » Tue Jun 30, 2020 4:46 pm

Hi everyone I will be paying off my mortgage in july. I have a few questions to see what others have done in this case. Im married with a 3 1/2 year old and another child on the way in Nov. We live in a condo and can comfortably live there another 5 years.

My question is when the time comes should I use the property as a rental or sell and use partial money for down payment and the remaing into investment?

And what are your thoughts on paying off mortgage asap to taking a 30 year and using the extra money as investment again?


Would love for you all to share ideas and thoughts with me please.

Thanks as always

ddurrett896
Posts: 1256
Joined: Wed Nov 05, 2014 3:23 pm

Re: Paid off Mortgage

Post by ddurrett896 » Tue Jun 30, 2020 4:56 pm

Accidental landlord here. Ended up being a landlord for 7 years, renting a condo we previously lived in. Sold in January and couldn't be happier.

The 4 sets of tenants were perfect - paid on time and kept the place clean. Hated getting the random calls...ants are in here what do we do? The dryer knob isn't turning all the way.

Could offset the headache for 10% but I'm handy and that wiped out any gains. I'd sell.

Topic Author
socalindex
Posts: 15
Joined: Tue Apr 14, 2020 12:51 pm

Re: Paid off Mortgage

Post by socalindex » Tue Jun 30, 2020 5:09 pm

Thank you for the quick response. And what would you do with your money after the sale?

And did you try to pay mortgage asap?

7eight9
Posts: 1065
Joined: Fri May 17, 2019 7:11 pm

Re: Paid off Mortgage

Post by 7eight9 » Tue Jun 30, 2020 5:11 pm

Some would advocate never paying off your home ...

Interest only mortgage: the conservative choice?
viewtopic.php?f=2&t=304655#p5036906
I guess it all could be much worse. | They could be warming up my hearse.

Topic Author
socalindex
Posts: 15
Joined: Tue Apr 14, 2020 12:51 pm

Re: Paid off Mortgage

Post by socalindex » Tue Jun 30, 2020 5:19 pm

7eight9 wrote:
Tue Jun 30, 2020 5:11 pm
Some would advocate never paying off your home ...

Interest only mortgage: the conservative choice?
viewtopic.php?f=2&t=304655#p5036906
Thank you . I'll take a look

neverpanic
Posts: 219
Joined: Sun May 10, 2020 12:26 am

Re: Paid off Mortgage

Post by neverpanic » Tue Jun 30, 2020 5:21 pm

socalindex wrote:
Tue Jun 30, 2020 4:46 pm
Hi everyone I will be paying off my mortgage in july. I have a few questions to see what others have done in this case. Im married with a 3 1/2 year old and another child on the way in Nov. We live in a condo and can comfortably live there another 5 years.

My question is when the time comes should I use the property as a rental or sell and use partial money for down payment and the remaing into investment?

And what are your thoughts on paying off mortgage asap to taking a 30 year and using the extra money as investment again?


Would love for you all to share ideas and thoughts with me please.

Thanks as always
Congratulations!

Speaking from my own perspective only, it was important to be debt-free as soon as I could get there, even if doing so cost me potential gains in the 2018-2019 market when I could have had twice as much cash working for me there. But I had a high interest rate mortgage, so it made sense to take that sort of conservative approach to paying myself.

For people from poor backgrounds, debt tends to be wielded against us, whereas people from more comfortable or well-to-do backgrounds tend to know how to use debt as leverage.

Although no one can predict what the housing/rental market will be like in 5 years, as you describe your life situation, I would not want to be a landlord if I had a young family with 2 small children. YMMV
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.

grettman
Posts: 567
Joined: Mon Sep 29, 2014 1:47 pm

Re: Paid off Mortgage

Post by grettman » Tue Jun 30, 2020 5:24 pm

I will have my house paid off next Christmas.

I can’t wait.

Mathematically it probably isn’t the best thing for me but I want to be debt free!

Grt2bOutdoors
Posts: 22556
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Paid off Mortgage

Post by Grt2bOutdoors » Tue Jun 30, 2020 5:25 pm

Is the neighborhood desirable?
Is the maintenance fees reasonable?
How strong is the associations finances, are there capable officers on the board of the association?
Can you charge a reasonable rent enough to cover all expenses and give you a reasonable profit?
How do you feel about getting a phone call at 2 in the morning about a toilet bowl that keeps running or doesn’t flush? How about a broken appliance?

I own a rental condo and sometimes I wish we had sold it. Have a good tenant but that may not always be the case.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

LeftCoast
Posts: 98
Joined: Mon Jan 01, 2018 12:19 pm

Re: Paid off Mortgage

Post by LeftCoast » Tue Jun 30, 2020 6:40 pm

I've been there, and my suggestion is to pay off the mortgage and keep the condo only if you can handle being a landlord.

After I paid off the mortgage, I re-directed the extra cash flow to additional contributions to tax-advantaged retirement funds (401K, IRA). I also decreased my life insurance, as one of the purposes of the insurance was to provide my wife and child with a place to live if something happened to me. With no mortgage, I didn't need as much insurance. Finally, my wife and I slept better knowing we owned our home outright. Of course, that was a time when mortgage interest rates were higher than 5%!

With regard to keeping and renting the condo, some people are just not cut out to be landlords. You could hire a manager, but that will really hurt your returns. We kept the condo for about 5 years, but when we decided to sell, we found it almost impossible to sell while it was rented. The condo didn't show well with the tenant's stuff, and it was hard to schedule open houses and viewings. Once the tenant agreed to depart, the income stopped, but the condo sold quickly.

In my opinion, if you want to be a landlord, sell the condo and buy an apartment building. The economics are much better for apartment buildings. We sold the condo and later bought two apartment buildings. They have gone up in value, provide good income, and haven't been too difficult to manage (at least until the pandemic hit). Good luck.

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