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Thread: New to Retirement Planning

  1. #13

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    I just wonder about the wisdom of paying extra towards your mortgage, especially when you are going to be moving every few years. Perhaps it would be better to wait until you are living in the home you plan to retire in?

    The value of your home will probably go up over time, but it could also go down over the next few years.

    Paying extra saves you interest, but you lose the chance to earn interest with that money by putting it into your Roth or TSP. Mortgagerates are low so it is relatively easy today to earn morein yourinvestments than what the mortgage will cost you.

    Also, you don't have to set up a biweekly plan where the lender charges you a fee to do it--just send in the extra payments marked for principal.

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  3. #14

    Join Date
    Aug 2004
    Location
    Oklahoma, USA
    Posts
    4,064

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    MB - My opinion (2 cents): diversify. Do some of it all. Property, investments, TSP, etc. Consult with your accountant! A low rate / low principle mortgage will aid itemizing for the IRS (remember the medical cost for being older), or do you want the std. deduction? You need to set a goal for yourself and have a plan that assist you in getting there. If property goes in the toilet, you still have your investments and TSP. If investments goes... well you get the picture.
    Spaf

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  5. #15

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    Another two cents worth....I've been invested in real estate for 35 years. I've never seen it depreciate in all that time. The degree of appreciation varies from year to year but never have I seen it depreciate.

    I think whether you pay more towards your mortgage depends on many factors...your age, your financial status, your goals, your heirs. Only you can decide the answer to that question.

    For exampe, when I was younger, my goal was to get my home paid for. I did this several times, meaning several homes, by paying double or triple principle payments. Now at near retirement, I have several homes paid for. However, I am in the process of building a new retirement home. Do I want to invest large amounts of capital? No, because I will now let my equity work for me. I've taken out a large interest only equity line of credit on one of these to pay for my new home. I do not care whether this newmortgage ever gets paid off, because I've already got enough to leave my children. My goal at this point in my life is to have a small payment (therefore interest only mortgage) which is a comfortable payment on retirement income. My retirement income will be enhanced from the rental income. When I do depart and leave this home to my children, it will have appreciated considerably so the mortgage will still be much less than the fair market value (which by the way is not on this house but another home which will be a rental). I let my real estate investments pay for other purchases by renting them. I try to not sell property, but retain them and rent them out.

    I personally feel much more comfortable investing in real estate than the stock market, which I know nothing about. Hence, the reason I read this Board every day.

    Thanks again, Tom, for this informational site.



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  7. #16

    Join Date
    Oct 2004
    Location
    Minot, North Dakota, USA
    Posts
    27

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    I have been very interested in real estate investing. I'm thinking of making ita primary source of income after I retire from the military.

    Did you purchase a house to live in, pay it off completely, and then rent it out after moving to a new home, or did you start renting it out before the mortgage was paid off? How much time do rental properties require from you? If I were to be moved through obligations tothe military I wouldn't be able to personally oversee any rental properties.

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  9. #17

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    Boots wrote:
    I have been very interested in real estate investing. I'm thinking of making ita primary source of income after I retire from the military.

    Did you purchase a house to live in, pay it off completely, and then rent it out after moving to a new home, or did you start renting it out before the mortgage was paid off? How much time do rental properties require from you? If I were to be moved through obligations tothe military I wouldn't be able to personally oversee any rental properties.
    I started with a home in the D.C. area that I lived in. I purchased some adjoining properties. Then we moved out of the general area, but kept our home as a rental. I manage it myself, that is: advertise it, contract for repairs, etc. I have not had to use a management company yet. This particular home was large, so I devided it into a couple of rental units, which I rent for under the fair market value. This gives me some control in selecting tenants, and I have very little unoccupied time. My investment has probably increased more then ten times due not just to appreciation but additions and increase in size while I was living in it. I plan on the income from this one rental to supplement my retirement income substantially. In fact it has already been doing that since I am now single and live on my salary alone with this supplementing it.

    Email me directly if I can share my experience or advice with you.



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  11. #18

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    I totally agree with JeepersPeepers. You can't go wrong with buying your own house. The only problem with you is that you will have to move within 5 years or so. So, instead of buying a house (you can't have a dream house if you are in the military because you will be moving constantly) why not buy a fourplex. contrary to what people think, fourplex is considered a residential loan. This means that you can use your VA or you can get a conventional loan as a first time home buyer. You then live on one while you rent out the other three. The tenant will pay for your mortgage. When you have to PCS, you can then either sell it or have someone manage it. Either way, you have already built equity without paying for it and at the same time you have received (or may continue to receive) passive income. Passive income is money coming to you after everything is paid. If you can get a passive income of $500 every month, that will be $6K per year. You will never get that kind of raise in the military. The only thing I ask you is that please do your research first. Ignorance can cost you.

    Pyriel

    PS... If you decide to follow my advice,and youare like me who hates fixing toilet, don't worry about it. Just have someone fix it for you. It is tax deductible.


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