What is the best way to go? What do I do with the money?
February 21, 2010 by
Filed under realestate rentals
At present, I own two houses. One is my primary residence and the second is a rental property. I am considering selling the rental property and the earned income from the sale would be enough to pay off the mortgage on my residence. Also, I an looking forward to receiving a substancial amount of money at least by the end of the year. What should I do with the money? should I invest it and earn intrest on it? Should I use it to pay down the mortgages if I decide to keep bothe houses? I’d like to invest the money and sell both houses and buy one nicer house out inthe country. My problem is, I don’t really understand where the realestate market is at right now and I’m not sure that I want to pay for something that is losing value every day.
I would keep both properties for now. Try to cut expenses for a while and try to pay down the mortgage on the rental so it can be paid off quicker. That way it will be like a 2nd income and use the rental money to pay off the primary residence for quicker payoff. Then put down 20% on your nicer house and rent out the other two houses to pay the mortgage.
Thats what i would do.
Before paying off your primary mortgage, you need to determine if you are getting a tax break by having the interest. In most cases, it is more cost effective to have a mortgage and deduct the interest on your taxes.
I don’t know how old you are so I can’t tell you how to invest the money. If you don’t want to take market risks then an annuity would be a good way to go. But only place money in the annuity you don’t plan on touching for a while. You can take 10% withdrawals without penalty on most annuities, but if you think you are going to withdrawal the entire contract within a few years of opening it, then you might want to look at alternatives. Annuities are generally a good “safe” investment.
If you are willing to take a little risk then talk to a financial adviser.