Hello Everybody,
So a question for my retiring inlaws (65 y/o and 70 y/o), they are about to sell their current house and move into a rental in a retirement community (i.e. finally get out of the cold). They also have another property that they have been using as an "investment" i.e. hoping to utilize the rental income. I am trying to help them decide what to do with the cash from the house they sell. They have a decent nest egg in pensions, tax-free accounts, and taxable accounts (don't know exact details but assuming low 7 figures). They can afford to pay the rental house mortgage even in retirement. The options and the details below:
1st House Sale: 350k (after all said and done)
2nd House (i.e. rental): Purchased for 800k, now worth $1 million, unpaid principal $380k with interest rate of 3.125%, mortgage is $4200 (they are paying interest of about $1100/month and taxes+insurance of $800/month), and current rent is $3000/month.
Options:
1) Take all of proceeds from 1st house and pay off the principal on 2nd house
2) Take all of proceeds from 1st house and invest in age appropriate vanguard target funds
3) Take all of proceeds from 1st house and put in a SPIA
4) Sell both houses (I am not sure what the tax implications are here).....
What do you think is the best option? They are essentially trying to maximize their income per month during retirement.
Thanks for all of the help,
SquashMan
So a question for my retiring inlaws (65 y/o and 70 y/o), they are about to sell their current house and move into a rental in a retirement community (i.e. finally get out of the cold). They also have another property that they have been using as an "investment" i.e. hoping to utilize the rental income. I am trying to help them decide what to do with the cash from the house they sell. They have a decent nest egg in pensions, tax-free accounts, and taxable accounts (don't know exact details but assuming low 7 figures). They can afford to pay the rental house mortgage even in retirement. The options and the details below:
1st House Sale: 350k (after all said and done)
2nd House (i.e. rental): Purchased for 800k, now worth $1 million, unpaid principal $380k with interest rate of 3.125%, mortgage is $4200 (they are paying interest of about $1100/month and taxes+insurance of $800/month), and current rent is $3000/month.
Options:
1) Take all of proceeds from 1st house and pay off the principal on 2nd house
2) Take all of proceeds from 1st house and invest in age appropriate vanguard target funds
3) Take all of proceeds from 1st house and put in a SPIA
4) Sell both houses (I am not sure what the tax implications are here).....
What do you think is the best option? They are essentially trying to maximize their income per month during retirement.
Thanks for all of the help,
SquashMan
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