Which would be better: Double payments on mortgage or invest?

[forsmant]

Do you plan on living in the house till you die? Do you have kids or plan to have kids? They are expensive. What is your risk tolerance? I will take the money off your hands, then you wouldn't have to worry about it.

 

[Kalifornia]

What is offering a real return of 20% these days?

In many places the prices being asked for purchasing real estate including everything results in payments higher than what you can rent the property out for- even if you allow for depreciation. Remember to include maintainance costs and the probability of a certain amount of time for the property being vacant between tenants meaning no revenue coming in on it.

Its not hard to find a plex or small apartment building which returns 20% of the down payment after expenses. Couple that with the tax advantages, the fact that the renters are paying down the note, growing your equity, the fact that it is a tangible commodity, will not suffer from inflation (like dollar delimited intangible investments), and the fact that in good times or bad, people have to have a place to live, making a down payment on a rental property is one of the best investments out there.

Houses are a different deal, and the real pros stay away from them unless they are literally a steal with a long term stable renter. Flippers are generally amateurs who only make money when the market goes up.

 

[Mortikhi]

Do you plan on living in the house till you die? Do you have kids or plan to have kids? They are expensive. What is your risk tolerance? I will take the money off your hands, then you wouldn't have to worry about it.

I'm 35, 3 kids, no I'm not living in this house until I die, and I'm pretty attached to the cash I make

 

[[email protected]]

Get out of debt. Look at it this way. Would you borrow money against your house to invest with?

 

[AceNZ]

I guess I'm the contrarian here.

Sell your house. Pull out as much equity as you can now, before house prices collapse by another 30 to 50%. Invest the proceeds, along with your current income and rent a place until the housing market recovers.

Here's a short article with some example numbers: http://www.12retire.com/?p=26

 

[B964]

Pay down.

I have been working on moving some of my investments from stocks to things of hard, real value.
Property, farmable land, independent power and water for home,personal protection..... Things of value to me, my family, and neighbors. (few things are more dangerous than a starving neighbor).

 

[Zippyjuan]

I guess I'm the contrarian here.

Sell your house. Pull out as much equity as you can now, before house prices collapse by another 30 to 50%. Invest the proceeds, along with your current income and rent a place until the housing market recovers.

Here's a short article with some example numbers: http://www.12retire.com/?p=26

I had a friend who told me a few years ago that housing prices would collapse that I should sell my place, invest the money while renting, and wait for the prices to fall and then buy back or get another house. Well even after prices have dropped some, they are still more than twice what I paid (around the year 2000- I was lucky enough to get in just as the boom was starting) and if I repurchased today I would have to pay a lot more to get the same place and face higher property taxes because of it. Those higher property taxes would be with me as long as I was an owner of a home. There is no certainty that you could come out ahead and would probably lose. Your plan involves a lot of risk. I prefered not to take that risk with my home. For me, the idea is to have it paid for by the time I retire so I do not face that expense when my income is reduced.

 

[rodo1776]

I'm sure you are already doing this since you are a smart person to have yourself in the position you are in, but if not (and assuming you pay income taxes) make sure your 401k(s) are maxed out each month. IRA as well. This is tax free money and everyone who can afford it should max these out. Even if it is only invested in money market type rates (to not risk a stock market meltdown) you earn the percentage that these extra dollars would be taxed at. At the highest bracket you are in at your last taxable dollars as well.

 

[AceNZ]

I had a friend who told me a few years ago that housing prices would collapse that I should sell my place, invest the money while renting, and wait for the prices to fall and then buy back or get another house. Well even after prices have dropped some, they are still more than twice what I paid (around the year 2000- I was lucky enough to get in just as the boom was starting) and if I repurchased today I would have to pay a lot more to get the same place and face higher property taxes because of it. Those higher property taxes would be with me as long as I was an owner of a home. There is no certainty that you could come out ahead and would probably lose. Your plan involves a lot of risk. I prefered not to take that risk with my home. For me, the idea is to have it paid for by the time I retire so I do not face that expense when my income is reduced.

I could turn that around and say that a buy-and-hold approach during a secular bear market is the riskier approach.

However, if you're happy to lose all of the equity that you've built up in your house, as prices go down to below where they were at the start of the boom, then hey, go for it!

 

[DriftWood]

The wife and I have gotten our bills and expenses down to the point where we have $2k/month saved (all bills paid, food, etc etc).

What would better financially: paying down the mortgage faster to where it is gone in 10 years (saving us hundreds of thousands of dollars) or investing that money and have it work for us for a change?

Im no expert but..
An inflation is actually an advantage to anyone with debt and a disadvantage to anyone with savings. Unless the interest on your loans is huge it might be better to pay it back as slowly as you can. That way you can pay back the debt with a dollar that is worth less. Putting that extra money into a bank account is not such a good idea unless you have an account that gives a very high interest rate. So that leaves the options to simply spend the extra money or to investing it. Spending it might sound reckless, and investing as always is a bit risky and inlation probably makes the market even less predictable. Commodities (oil, gold, grain etc) look like the best bets at the moment.

Cheers

 

[Tratzman]

Pay down your debt, Mortiki. There's true freedom in having a house that's paid off. Your options increase exponentially.

Chad

 

[NMCB3]

Do both, pay down your debt and invest in PM`s...You have more flexibility this way. Diversification is wise in uncertain times such as these