hello all
I hope you're doing well. I'm seeking some guidance on a financial decision involving my investment property and primary mortgage, and I would greatly appreciate your expert advice.
Here's my current situation:
Investment Property: I own a rental house in Houston, purchased in 2020 for $265,000, which is now valued at approximately 370k ( Should get $350,000 after all expenses). The property is fully paid off. I rent it out for $2,850 per month, but due to weather-related repairs, high insurance, real estate taxes, and other maintenance costs, I net around $1,700 per month (assuming 10 months of occupancy per year). This results in about $17,000 net annually after HOA fees, real estate taxes, insurance, and maintenance.
Primary Residence: I have a primary home in California with an outstanding mortgage of $850,000 at a 3.625% interest rate, with 28 years remaining. My monthly mortgage payment is $4,050, which includes $2,600 in interest and $1,450 in principal.
Given these details, I have a couple of options I'm considering and would like your advice on which might be more beneficial in the long term:
Sell the Rental Property: If I sell the rental property, I could use the $350,000 proceeds to reduce my primary mortgage balance from $850,000 to $500,000. By recasting the loan, my new monthly payment would be approximately $2,300, with no changes to the interest rate or loan term. This would significantly reduce my interest payments over time.
Keep the Rental Property: Continue renting out the property and using the $17,000 net annual income to supplement my current mortgage payments. The property value has gone up by more than 30% in the last 4 years ..
if I do the latter then I will maintain my current primary mortgage payment of $4,050.Considering the high interest payments( more than 30k per year on interest alone on the primary mortgage) and the relatively lower net income from the rental property, which option do you think would be more financially advantageous in the long run? also what will be tax implications ?
Thank you in advance for your help!
Regards
I hope you're doing well. I'm seeking some guidance on a financial decision involving my investment property and primary mortgage, and I would greatly appreciate your expert advice.
Here's my current situation:
Investment Property: I own a rental house in Houston, purchased in 2020 for $265,000, which is now valued at approximately 370k ( Should get $350,000 after all expenses). The property is fully paid off. I rent it out for $2,850 per month, but due to weather-related repairs, high insurance, real estate taxes, and other maintenance costs, I net around $1,700 per month (assuming 10 months of occupancy per year). This results in about $17,000 net annually after HOA fees, real estate taxes, insurance, and maintenance.
Primary Residence: I have a primary home in California with an outstanding mortgage of $850,000 at a 3.625% interest rate, with 28 years remaining. My monthly mortgage payment is $4,050, which includes $2,600 in interest and $1,450 in principal.
Given these details, I have a couple of options I'm considering and would like your advice on which might be more beneficial in the long term:
Sell the Rental Property: If I sell the rental property, I could use the $350,000 proceeds to reduce my primary mortgage balance from $850,000 to $500,000. By recasting the loan, my new monthly payment would be approximately $2,300, with no changes to the interest rate or loan term. This would significantly reduce my interest payments over time.
Keep the Rental Property: Continue renting out the property and using the $17,000 net annual income to supplement my current mortgage payments. The property value has gone up by more than 30% in the last 4 years ..
if I do the latter then I will maintain my current primary mortgage payment of $4,050.Considering the high interest payments( more than 30k per year on interest alone on the primary mortgage) and the relatively lower net income from the rental property, which option do you think would be more financially advantageous in the long run? also what will be tax implications ?
Thank you in advance for your help!
Regards
Statistics: Posted by jack22 — Fri Jun 07, 2024 2:50 pm — Replies 5 — Views 321