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Any financial guys out there. Here is my question. I have a rental that the mortgage is being paid by the renter. Now the question is do I refi and lower my mortgage by $260.00 a month and put that money into a retirement fund or sell the house and get between 70k and 100k and pay the 15% tax on it and then invest that? I'm 58 this year and little to show for retirement as I have always worked for very small companies that never offered any type of retirement plans. We have some that we have put away but not as much as we would like.
 

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Don't know how close you are to retirement, but I would keep paying off the place at the higher rate. Seems a safer bet right now with interest being so low and no promise in the stock market. One thing is solid and keeping up with inflation is the property it'self. As the renter is taking care of the payment and needs hopefully, when you get to the time to let it go it will most likely outdo anyother place you could put the money. Besides I think the gov won't be able to dig as far into your income from it.
 

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First, what is your basis in the house, i.e., what did you pay for it plus any major improvements? What is the balance on the mortgage? Who pays the real estate taxes and how much are they? Does the renter pay all utilities?
 

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Lots of questions...

First, if the place is paying for itself and you don't mind the hassles of being a landlord and your refi is not going to cost you more in the long run (longer terms or just a better interest rate?), I'ld keep it. Try to come up with a way to reinvest "profits" back into the property if you can and it's worth it. This way you avoid taxes. Property taxes may go up but that is offset with cost of ownership and is deducted from income. If you have to take the money put it into a Roth IRA. Whatever you do, don't go for longer terms. Once it's paid off you get the rental income, less expenses, that could make a good income augment in retirement. There are a lot of cost you can claim in expenses. If you want out look into a Like Kind Exchange. Lets you sell and then reinvest with out having to pay taxes. You sell that rental and buy a place that you might want to use in retirement. You could sell the rental and your house and combine into one property. You are not avoiding the taxes only postponing them. You can do that until you die if you play your marbles right, but Uncle Sam will get his due.
 

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I like the Dave Ramsey version. If you didnt have your rental property and you had 70k in your pocket would you go buy the rental? If not then sell it.. We are in uncertain financial times and i honestly dont know what i would do. To me the rental would be a big headache unless i lived really close like next door.

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With all due respect TWilight he is still going to have the basis of the 70k to what ever he gets out of it on top of the additional $260 a month. So if he saved that money and combined it with the value of the property itself it would be double the the 60k. If his capital gains so far from owning it is the 70 to 100k thqt is a good indication the property could also appreciate into the future, (more than likely), and inflation would also drive rental rates up (also likely).

There is a lot to be lost buying and selling re-estate, commissions, taxes, title transfer fees, etc. not just the income tax on capital gains.
 

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It's not that hard. Look up WEC (Wisconsin Energies) 3.2% in dividends and easily increase in stock price averaging another 3, 4 or 5% per year over a five year period.

Thing is, one things for certain and that is nothing's for certain.

My Stock pics are WEC, LNT and DTE. I average a little more than 12% with gains and dividends.
 

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Discussion Starter #11
Thanks for the reply's everyone. The refi is with the current lender Wells Fargo, paper work says their fee is 875.00. I need to verify this when I meet with him. We currently rent a small apt at some friends place on 5ac. They are missionaries and we moved into their house in 2009-2014, while they were in Africa, while renting our house to some other friends that needed a larger house. Since they have returned we have moved into the apt (converted shop 32x36). Love the downsize. Rent is cheap cheap cheap so that's all good. Question always in the back of my mind is what if our friends sell?? We have talked about this and he is trying to refi now as well, so he has no plans to sell anytime soon. I'm leaning towards keeping the rental and going with the refi. decisions decisions.

Thanks, still working the numbers:)
 
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