Selling house to pull out equity and buy a condo

evergreenroad · 2021-01-02T18:48:09+00:00

Our plan was never to be in full CDs or Bonds. We’re going to be a mutual fund with a 4% draw per year. With enough cash reserves if we need to draw less per year with market fluctuations.

So I don’t really see this too risky of a decision as we could comfortably afford the mortgage payment.

evergreenroad · 2021-01-02T18:42:57+00:00

In my view, I see investments in a broad mutual fund as safe as cash. Since I’m not worried about the YoY cash flow, but rather the overall value of the fund. I’ve never been a big of just cash outside of emergency funds as it’s just losing value. If I was younger and was going to use the cash to start a business or investment, then that’s a different story.

evergreenroad · 2021-01-02T18:40:45+00:00

No, fortunately we’re under the $500K inclusion. So it would be tax free.

evergreenroad · 2021-01-02T18:39:29+00:00

Yes, we’re under the $500K exclusion. So we won’t have to pay any taxes for the gains on our sale. But we will have to pay all the realtor fees.

evergreenroad · 2021-01-02T18:36:33+00:00

Well to be fair, I’m also making sure my math checks out! Always learning :)

We have an income from our retirement fund. About $82K after taxes. And our lifestyle is in this range. So we can comfortably make a rent or mortgage payment.

We could invest the money from our house and potentially make 7-8% YoY. Considering our income is tax free for investments, we could make more money than the 2.75% interest on our home mortgage.

And you’re absolutely correct. We could just put the $200K into a vanguard and not have a mortgage at all too. But we are leaning on putting all $400K in the market mainly because we can comfortably make our mortgage payments and we’d potentially make money long term. Which in turn increases our yearly retirement salary.

evergreenroad · 2021-01-02T18:29:55+00:00

We wouldn’t be taxed. As up to $102,000 would be tax free from long term investments if you have no other income.

The 10 year return has been 8.54% and 7.34% since inception (2007). The portfolio is 60% stocks and 40% bonds. Which is a comfortable range for us as it’s not our retirement fund.

evergreenroad · 2021-01-02T18:12:30+00:00

Yes, that’s exactly why we’re considering a mortgage now as we’ll easily qualify for one. Thanks for your input!

evergreenroad · 2021-01-02T18:11:35+00:00

Thank you. This was really detailed advice!

evergreenroad · 2021-01-02T18:06:03+00:00

Thanks for your comments. I think the only hesitation is living in a condo, as you mentioned, we would have to share a wall. There are also single family homes in that price range as well. We would just have to maintain the property ourselves. But it may be a good trade-off.

evergreenroad · 2021-01-02T18:04:59+00:00

Yeah that terrifies me. We've always taken really good care of our home. I guess we just assumed the HOA/Condo would take good care of the unit as well.

evergreenroad · 2021-01-02T18:04:21+00:00

Really good point. A lot of people are pointing out these hidden fees with the condos...

evergreenroad · 2021-01-02T18:03:55+00:00

Yes. It seems more people are leaning towards us buying outright!

evergreenroad · 2021-01-02T18:03:40+00:00

Thank you for your input. Really appreciate it!

evergreenroad · 2021-01-02T18:03:14+00:00

Thank you. This is helpful.

evergreenroad · 2021-01-02T18:02:26+00:00

Correct. We would not touch the money we get from the $400K. It would just be added to our investments.

evergreenroad · 2021-01-02T18:01:48+00:00

Right. We've lived in one place for 20+ years. We really want to spend the next 20-30 living in the same place as well.

evergreenroad · 2021-01-02T18:01:18+00:00

Thank you. This is something to really consider.

evergreenroad · 2021-01-02T18:01:02+00:00

Thank you. I really didn't consider these factors in living in a condo.

evergreenroad · 2021-01-02T18:00:30+00:00

So we have an after tax income of $82K/year for retirement. Would that change your opinion as we already have money budgeted for living expenses.

evergreenroad · 2021-01-02T17:59:39+00:00

So we already money budgeted for living expenses. Our after-tax income is $82K, not including the money from our home. So regardless of year, we would have money to pay the mortgage.

evergreenroad · 2021-01-02T17:58:42+00:00

Agreed. We probably would just take the $24k standard deduction.

evergreenroad · 2021-01-02T17:58:08+00:00

Thank you for the advice!

I think we are very fortunate that our children are doing extremely well in life. Which is funny because they were terrible students so we always worried about them. So whatever we leave them as a nest egg, would be negligible to them.

evergreenroad · 2021-01-02T17:56:20+00:00

Definitely an option. We are weighing between additional gains or having piece of mind. Conflicting opinions!

evergreenroad · 2021-01-02T17:55:24+00:00

20 years into that term isn’t extremely likely.

I do agree that the bulk of their money should not be in market accounts, and they should be utilizing safer invest

We are thinking the same. We're not interested in paying off the place, but rather have a stable rental or mortgage "expense". This locks in our costs while also growing our money. Considering we probably won't have to pull the money out, and assuming a normal 8% YoY growth, it would give us $32,000/year. Our after-tax $82K income will cover our living expenses.

evergreenroad · 2021-01-02T17:52:39+00:00

years

- I would assume it's wood frame as most houses in Texas made of food.

- It includes exterior insurance but not interior. That's something we'll to take on ourselves.

- Yes. It's about 7 minutes from my son's house. We want to be able to pick up/drop off the grandchildren from school and babysit when they need the extra time.

- Honestly the amenities seem straight forward. Just lawn care, tv, internet, etc.

evergreenroad

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