Pay off house or not? (by WMH [NC]) Nov 20, 2023 8:55 AM
Pay off house or not? (by Jim in O C [CA]) Nov 20, 2023 9:13 AM
Pay off house or not? (by plenty [MO]) Nov 20, 2023 9:29 AM
Pay off house or not? (by WMH [NC]) Nov 20, 2023 9:30 AM
Pay off house or not? (by Nicole [PA]) Nov 20, 2023 9:33 AM
Pay off house or not? (by Richard [MI]) Nov 20, 2023 9:43 AM
Pay off house or not? (by Robert,OntarioCanada [ON]) Nov 20, 2023 10:18 AM
Pay off house or not? (by razorback_tim [AR]) Nov 20, 2023 10:39 AM
Pay off house or not? (by Jason [VA]) Nov 20, 2023 10:48 AM
Pay off house or not? (by S i d [MO]) Nov 20, 2023 10:55 AM
Pay off house or not? (by WMH [NC]) Nov 20, 2023 11:19 AM
Pay off house or not? (by MikeA [TX]) Nov 20, 2023 11:23 AM
Pay off house or not? (by WMH [NC]) Nov 20, 2023 11:44 AM
Pay off house or not? (by WMH [NC]) Nov 20, 2023 11:45 AM
Pay off house or not? (by Jim in O C [CA]) Nov 20, 2023 11:46 AM
Pay off house or not? (by MikeA [TX]) Nov 20, 2023 12:25 PM
Pay off house or not? (by razorback_tim [AR]) Nov 20, 2023 1:17 PM
Pay off house or not? (by RB [TN]) Nov 20, 2023 3:59 PM
Pay off house or not? (by Ed [CA]) Nov 20, 2023 4:02 PM
Pay off house or not? (by WMH [NC]) Nov 20, 2023 5:05 PM
Pay off house or not? (by Homer [TX]) Nov 20, 2023 5:30 PM
Pay off house or not? (by RB [TN]) Nov 20, 2023 5:40 PM
Pay off house or not? (by 6x6 [TN]) Nov 20, 2023 8:59 PM
Pay off house or not? (by BRAD 20,000 [IN]) Nov 21, 2023 1:45 AM
Pay off house or not? (by BRAD 20,000 [IN]) Nov 21, 2023 1:48 AM
Pay off house or not? (by Ray-N-Pa [PA]) Nov 21, 2023 6:28 AM
Pay off house or not? (by unb [GA]) Nov 21, 2023 6:35 AM
Pay off house or not? (by tryan [MA]) Nov 21, 2023 9:36 AM
Pay off house or not? (by Ken [NY]) Nov 21, 2023 9:42 AM
Pay off house or not? (by Robert J [CA]) Nov 21, 2023 1:33 PM
Pay off house or not? (by Dodge [PA]) Nov 21, 2023 5:39 PM
Pay off house or not? (by WMH [NC]) Nov 21, 2023 8:43 PM
Pay off house or not? (by OREO [WI]) Nov 22, 2023 12:57 AM
Pay off house or not? (by Tarheel T [NC]) Nov 22, 2023 5:36 AM
Pay off house or not? (by MMIT [VA]) Nov 22, 2023 12:47 PM
Pay off house or not? (by Barb [MO]) Nov 22, 2023 10:30 PM
Pay off house or not? (by RentsDue [MA]) Nov 26, 2023 11:12 AM
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 8:55 AM Message:
Opinions from the Hive Mind please?
Quadplex with remaining 10 years/90K loan at 5.78 percent.
Payment is about $1600.
Payment is now split about $1100 to principal and $500 to interest.
Pay it off? Can't find anything else to buy - we've looked! And certainly, $90k isn't going to buy anything anymore anyway. We've found ONE place, it's $300k for two units - a mobile with a garage apartment. Rents about $1500 each. I'd offer $200k which he won't take as he HAS fixed up the places.
So...what do you all think? --108.4.xx.xxx |
Pay off house or not? (by Jim in O C [CA]) Posted on: Nov 20, 2023 9:13 AM Message:
Pay it off. --146.70.xxx.xxx |
Pay off house or not? (by plenty [MO]) Posted on: Nov 20, 2023 9:29 AM Message:
Not yet. Hold steady. --172.59.xxx.xxx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 9:30 AM Message:
That's what I think too Jim...it would be like buying a house for $90k/$1600 rent in my opinion.
DH wants to continue buying but he admits we can't find anything and we are NOT 40 or 50 or even 60 anymore. If we find a place it will most likely need a LOT of work and we aren't interested in that anymore.
We still have a couple of permitted ADUs we haven't even started yet... --108.4.xx.xxx |
Pay off house or not? (by Nicole [PA]) Posted on: Nov 20, 2023 9:33 AM Message:
Others love paid off places. Me, not so much.
But, if you are considering paying it down, do it slowly/rapidly. Make additional monthly principal payments of whatever - maybe $1,000. Balance will drop quickly but you will also have a chunk of your money should you want/need it. I didn't amortize it but see what $2100 a month principal does to the time line. --98.237.xxx.xx |
Pay off house or not? (by Richard [MI]) Posted on: Nov 20, 2023 9:43 AM Message:
5.78 interest rate isn't so bad -- if it's fixed.
If you have plenty of money in the bank, pay half of it off. Save the other half for investments that may come up as the country is in recession and prices are likely to drop in the next 18 months. If you have lots of money in the bank, just pay it off.
As the recession deepens there is the possibility that money may be harder to borrow and also be at higher interest.
Not to mention, if the tenants have problems and can't or won't pay, you will have a reserve. --75.7.xx.xx |
Pay off house or not? (by Robert,OntarioCanada [ON]) Posted on: Nov 20, 2023 10:18 AM Message:
It is always better to have 100 per cent equity as if things get difficult then will be able to weather more difficult times along with any major repairs or renovations are required then will able to do that. With war in Ukraine we do not what is going to happen next year. While the economic situation in the Us is better than here it may not last after the election. My situation was intending to become completely debt free this but had $22,000 in taxes where next month will completely pay vehicle loan then pay off line of credit along taxes next year. When you look every month that money can invested in short term treasury bills along other investments. --207.236.xxx.xxx |
Pay off house or not? (by razorback_tim [AR]) Posted on: Nov 20, 2023 10:39 AM Message:
Unless you have an alternative investment where $90K will provide $1600/month cash flow, pay it off. IMO it's a no-brainer.
But something doesn't add up. $90,000 ammortized for 10 years at 5.78% will have a monthly payment of a little under $1,000.00. --98.174.xxx.xxx |
Pay off house or not? (by Jason [VA]) Posted on: Nov 20, 2023 10:48 AM Message:
I love the cash flow my paid for properties bring. You’re late in your investment cycle, Pay it off --174.193.xx.xx |
Pay off house or not? (by S i d [MO]) Posted on: Nov 20, 2023 10:55 AM Message:
Pay it off. If you decide you want / need cash for something else, any bank will slap a HELOC on it for you without even an appraisal in most cases as long as you don't ask for some ridiculous amount. You can have the money in a few days.
Paying off interest bearing notes is earning the interest in additional profits. The only time it makes sense to let debt ride is when inflation is way higher than the interest rate, since you gain free equity equal to the spread between what the interest costs you vs. what inflation eats away. Right now, inflation is around 4%, so you're not gaining anything by letting a 5.78% note ride.
--184.4.xx.xx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 11:19 AM Message:
RZTim, original loan was $368k ($460k 20% down.) $10k back at closing for a new roof. Interest only for 10 years, then converted to fixed for final twenty years.
So I paid that sucker down like crazy during the first 10 years, and when it converted to fixed 10 years ago, the payment locked in at $1595.79 for the remaining 20 years. 10 more years have flown by...now that we are not actively buying, I'm eyeing that note. --108.4.xx.xxx |
Pay off house or not? (by MikeA [TX]) Posted on: Nov 20, 2023 11:23 AM Message:
Logic would say that if you are making less than 5.78% on your money sitting in the bank then you should pay it off. I haven't heard any economist say there is going to be a huge change that would drop prices substantially so while you may find a deal here or there, you likely aren't going to find many that would eat up significant cash. It will take about 4 1/2 years of socking the $1600/month away to replenish the $90K cash. So the snowball will gain momentum. The only other option might be to sink it into building out the ADU's if they will give you a higher return on the money.
Lots of other factors to consider as we get older as well. I'm at a point where I'm selling off to my son little by little. I had a mentor when I first started out who kept his longer than he was mentally (and physically) able and it cost his estate what would be a couple of million in today's dollars. That was a hefty price the last 3-4 years of his life. I'm not going to make that mistake.
--209.205.xxx.xx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 11:44 AM Message:
Mike, our "empire" is going to our kids, divided - they each get certain houses to do whatever they want or need to do with them without having to have family consensus. We are actively training one son in the biz - he can teach the others. I expect Son #1 will sell - he lives in another country. Son #2 has never been great with money - hopefully he'll keep the money machines but if he doesn't, that's his problem. --108.4.xx.xxx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 11:45 AM Message:
And we are training Son #3 because he and his wife are very interested in rentals as a biz. --108.4.xx.xxx |
Pay off house or not? (by Jim in O C [CA]) Posted on: Nov 20, 2023 11:46 AM Message:
My wife and I are in our 80’s. The plan is maybe sell some properties after the first one goes or let our son sell all when we are gone. That way he gets the stepped tax basis and avoids depreciation recapture. Fortunately our son is financially very responsible. --146.70.xxx.xxx |
Pay off house or not? (by MikeA [TX]) Posted on: Nov 20, 2023 12:25 PM Message:
WMH, the problem I see is not where the estate goes (although that is important). The problem is when our mental faculties fail while we are still in control of the day to day. I saw this guy make some really bad decisions. Tenants not paying and not being evicted, houses sitting vacant for months, the city putting liens against them for cleanup, contractors taking advantage of him, mortgages not being paid (to the point he lost a couple of properties), unrepaired roof leaks destroying properties, and the black sheeps of the family stealing cash. I tried to reason with him and get him to turn it over to a management company but he was very hard headed about his business. That's what made him so successful but was a detriment late in life.
Sounds like you have a plan with #3 in training to take over. The goal should be that he takes over the day to day in case you reach that point. It would be worth a conversation with him to discuss the best way for him to handle the point you are not able to make sound decisions and the extent of the duties you need him to perform. How do you handle things like accounting, tax preparation, cash management when you aren't able to do those things for yourself. He may not be thinking that extensively which may lead to more questions that need to be explored. --209.205.xxx.xx |
Pay off house or not? (by razorback_tim [AR]) Posted on: Nov 20, 2023 1:17 PM Message:
WMH, that makes sense. I still say pay it off. Increase your cash flow by $1600/mo.
You've highlighted the downside to accelerated payments without completely paying off the note that several have proposed. You have given your money to the bank in the form of additional principal, but have not improved your cashflow situation. Increased cashflow only happens if you reammortize the loan or completely pay it off. --98.174.xxx.xxx |
Pay off house or not? (by RB [TN]) Posted on: Nov 20, 2023 3:59 PM Message:
Zero balance that Sucker ! --69.130.xxx.xxx |
Pay off house or not? (by Ed [CA]) Posted on: Nov 20, 2023 4:02 PM Message:
Take the 90k and build the ADU's = more income for the same money. --108.201.xx.xx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 20, 2023 5:05 PM Message:
Ed, it did re-amortize based on the balance when it adjusted from an interest-only to a fixed, amortized loan. Fixed interest rate for the life of the loan (30 years.) 10 years of interest only - you can pay just the interest or whatever amount you want as long as it's more than the interest due. We paid it down aggressively.
The payment changes and locks in based on the amount due on the date it flips to a regular 20-year loan.
I don't think these loans exist anymore but we had several back in the day. --108.4.xx.xxx |
Pay off house or not? (by Homer [TX]) Posted on: Nov 20, 2023 5:30 PM Message:
If I read correctly and you owe 90 k at 5.78 percent over the next 10 years, the loan ammo calculator says you spend 28,200 interest. Or my calculations just on a cd one year at a time gets you $5,400 on the first year, over 10 years that’s $54,000 interest earned, not even calculating interest on interest. Now, can we expect to continue getting 5.6 percent on CDs over the next 10 years? That’s the million dollar question. As for me, I am buying CDs . If rates fall I’ll reevaluate. --66.169.xxx.xxx |
Pay off house or not? (by RB [TN]) Posted on: Nov 20, 2023 5:40 PM Message:
I know that's right, Homer. --69.130.xxx.xxx |
Pay off house or not? (by 6x6 [TN]) Posted on: Nov 20, 2023 8:59 PM Message:
Being debt free sounds good. --73.190.xxx.xxx |
Pay off house or not? (by BRAD 20,000 [IN]) Posted on: Nov 21, 2023 1:45 AM Message:
W,
Me? Debt free is a great place to be.
$1600 per month additional income is as good or better than buying another property. I say better because it’s additional income without another moving part to manage.
$90k / $1600 = 4.6 year payback. Good investment. And a lot of interest money saved. Double good!
In my area “buying” a prop for $90 that yields $1600 after expense is a great deal.
I really like generous cash flow not having the pressure to maximize and collect rents to help pay the bankers’ Mercedes lease.
I also like the idea of a cleaner business to pass along.
At my stage (and yours I believe) I want simplicity and ease. When I shifted my focus from number of units to cash flow and profit my stress level went way down. I work on making what I already own give me more.
BRAD --73.103.xxx.xxx |
Pay off house or not? (by BRAD 20,000 [IN]) Posted on: Nov 21, 2023 1:48 AM Message:
W,
Me? Debt free is a great place to be.
$1600 per month additional income is as good or better than buying another property. I say better because it’s additional income without another moving part to manage.
$90k / $1600 = 4.6 year payback. Good investment. And a lot of interest money saved. Double good!
In my area “buying” a prop for $90 that yields $1600 after expense is a great deal.
I really like generous cash flow not having the pressure to maximize and collect rents to help pay the bankers’ Mercedes lease.
I also like the idea of a cleaner business to pass along.
At my stage (and yours I believe) I want simplicity and ease. When I shifted my focus from number of units to cash flow and profit my stress level went way down. I work on making what I already own give me more.
BRAD --73.103.xxx.xxx |
Pay off house or not? (by Ray-N-Pa [PA]) Posted on: Nov 21, 2023 6:28 AM Message:
I fund myself paying Uncle Joe over $90,000 last year. Why so much? too many places paid off and not enough subsidizing of the banks.
So how close are you to jumping into yet another tax bracket?
Where cash flow is wonderful, if you are finding yourself hooking up Uncle Sam too much already, then understand that you asking to pay them even more. Your rate is good.
So do you plan on picking up any new places any time over the next couple of years? I just got loan last week at 7.5% for 10 years. I would throw that extra money on that higher rate place over a lower rate place - UNLESS you are trying to create a debt snowball. If you are trying to do that then you use the loan with the smallest balance instead --24.101.xxx.xxx |
Pay off house or not? (by unb [GA]) Posted on: Nov 21, 2023 6:35 AM Message:
Once you hit the mark of more principle being paid then interest I wouldn't do it. Bulk up your reserve for replacement accounts. Make that super deal on the new work truck. 30K down finance the rest. Take a great trip with your pay bonus from the business. --108.239.xx.xx |
Pay off house or not? (by tryan [MA]) Posted on: Nov 21, 2023 9:36 AM Message:
I always paid them off so I got move them into an S Corp free n'clear. That was my self cooked liability insurance. Divide and conquer.
Nice that your kids have an interest. My 2 wanted nothing to do with the hood. Hence I sold out. --198.168.xx.xxx |
Pay off house or not? (by Ken [NY]) Posted on: Nov 21, 2023 9:42 AM Message:
i would just keep making the payments provided no balloon maybe it is time to do another adu with the money,your husband can just supervise other guys doing the actual work --73.177.xxx.xx |
Pay off house or not? (by Robert J [CA]) Posted on: Nov 21, 2023 1:33 PM Message:
Ever heard of a thing called "Asset Protection"?
I had a house with a partner. Partner died and gave their share to a grown up married child. He took the property out of his parents trust and put it into HIS NAME. Somehow the title company put my share into my name, killing off my title held in my Family Trust.
Two months Later a Fraud Ring took title and sold the home. Since I had current title insurance AND a great attorney, we sued my partner, his title Company (Then never gave notice of a title change) and the Fraud Ring. --47.155.xx.xxx |
Pay off house or not? (by Dodge [PA]) Posted on: Nov 21, 2023 5:39 PM Message:
I vote to keep your powder dry. Maybe nothing to buy now but that may change in a couple of years. You'll be well positioned to buy with cash and not have to jump through hoops or expense of financing.
You can probably find a CD for close to that mortgage rate.
--98.235.xxx.xxx |
Pay off house or not? (by WMH [NC]) Posted on: Nov 21, 2023 8:43 PM Message:
Dodge, in "a couple of years" we'll both be in our 70's and not looking to buy/renovate houses... --108.4.xx.xxx |
Pay off house or not? (by OREO [WI]) Posted on: Nov 22, 2023 12:57 AM Message:
Right WMH, not lookin to buy or renovate houses anymore either.
After graduating from college my niece called me for some investment advice. She and husband had the opportunity to buy 3 townhouses next to one another in their town. She gave me all the details and something didn't sound/feel right about the situation, which I told her. "It's not a side hustle, more than that, it takes over your life."
I'm so glad she took my advice to not move forward with the rentals. Instead, she invested in farmland that had money coming in from renting the fields, unfarmed land the govt pays you not to farm, a good sized barn with office rented out. And there was a house on it. It is serving her well, being a hands off investment. --75.11.xx.xx |
Pay off house or not? (by Tarheel T [NC]) Posted on: Nov 22, 2023 5:36 AM Message:
WMH, i think this is a psychological thing for you as much as a $$ thing. If it makes you feel better, reduces stress i would pay it off. An accountant can do a cost benefit analysis on the $$ but only you know the benefit of a paid off quad to you!! --24.177.xxx.xxx |
Pay off house or not? (by MMIT [VA]) Posted on: Nov 22, 2023 12:47 PM Message:
WMH,
Congratulations on your successful real estate business!
Pay it off today!
If you decide you made a mistake by paying the mortgage off, go get another mortgage.
Debt free is a great place to be.
Debt free provides a cleaner estate. Your kids will appreciate the paid for real estate more than real estate that is mortgaged.
You cannot put a price on the piece of mind you will get when you are debt free.
I am 68 and would not want the pressure of a mortgage - even if it was a small percentage of our net worth. We have 20+ properties (class A, B, and C).
Good luck!
--174.206.xx.xxx |
Pay off house or not? (by Barb [MO]) Posted on: Nov 22, 2023 10:30 PM Message:
Can you get a CD that pays more than you are paying in interest? If not, pay it off. If so? Buy the CD.
I have a couple that I owe about $25-$30K on. Original pan was to pay one off in 2023, one in 2024. Well, I have them financed at 4.25%, and the local bank offers 15 month CDs at 5.5% interest. So I put my payoff in a CD.
I’ll buy another in a couple of months with another payoff amount, so long as the CD is paying more than I’m paying in interest.
Mine are adjustable rates, so my plan is to pay them off before they adjust in 2026 no matter what. --149.76.xxx.xx |
Pay off house or not? (by RentsDue [MA]) Posted on: Nov 26, 2023 11:12 AM Message:
Another good reason to pay it off has not been mentioned. Our state had “ The Cares Act” during the eviction moratorium. It gave extra protection to tenants who were living in a property that had a loan underwritten by FannieMae or Freddie Mac. Even if you didn’t originally, it is very possible that your loan was or could be sold to a bank that falls into that category. Paying it off gives you a lot more freedom than financial.I understand that the government will overstep regardless but why give them any leverage. --68.191.xx.xx |
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