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$150,000 cash question....help
Old 07-07-2005, 12:13 PM   #1
 
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$150,000 cash question....help

hi everyone, please advice me of what to do....

here is my financial status at a glance.

i still own $200,000 in home equity line at 4.25% for 6 months. ($1500/mon). $40,000 credit card 0% for 4 months, no other mortgage or car debt.

i am selling my investment properties for $150,000. this house got no mortgage. i will have to pay capital gain on this house since i make a profit unless i buy another house.

1) i found another house for $200,000 which will clear about $750 a month for me. should i buy it but it will put me in another $50k in debt. also, the price is peak.

2) or should i some bond or cd with $150k

3) or should i pay off the debt.

very very confusing of what to do. certainly do NOT want to discuss with my wife cause i know she will say "do whatever you want".

any accounting out there please, ANYBODY PLEASE ADVICE.

Thanks

ericMD
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Re: $150,000 cash question....help
Old 07-07-2005, 12:42 PM   #2
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Re: $150,000 cash question....help

My opinion is to pay down the highest interest rate debt first. I am no accountant, but 40k debt on a credit card at a teaser 0% interest rate, what is the rate after the intro period? 15%? 20%? Any idea?

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Re: $150,000 cash question....help
Old 07-07-2005, 01:18 PM   #3
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Re: $150,000 cash question....help

the questions depend on many variable such as your basis, tax rate, realistic net cash flow and mortgage term and availablitiy on the balance after the 1031 if it is still available to you.
I believe tax deferral is almost always the way to go.
Why not hire a CPA and run the actual numbers. Shouldn't cost more than a few hours, say $500.
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Re: $150,000 cash question....help
Old 07-07-2005, 02:12 PM   #4
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Re: $150,000 cash question....help

Question is why sell in investment property only to buy another? A 1031 exchange will DEFER the taxes but the transactions will not be free; realtor fees and tax stamps alone will set you back 6-7% (depending on where you live).

What's the need to sell? This might drive the answer to where to put the $$.
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Re: $150,000 cash question....help
Old 07-07-2005, 06:36 PM   #5
 
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Re: $150,000 cash question....help

thanks for everyone respone

1) 40k credit card 0% expired soon and will be paid by more home equity line at 4.25% then prime

2) if i buy $200k house, 50K will be in debt from more home equity line but after said and done it would give $650/mon cash flow

3) reason for selling the house?? i made a huge mistake by giving the tenants an option to purchase the house 2 year ago, now the house is worth around $70,000 more than the agreeD price. stupid, stupid me..

i am leaning more just buy another property for tax defer purpose suggested by uncledz.

PLEASE MORE MORE SUGGESTION PLEASE....
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Re: $150,000 cash question....help
Old 07-07-2005, 07:50 PM   #6
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Re: $150,000 cash question....help

4.25% then prime

I think the fed isnt going to stop anytime soon. why would you want it at prime rate.

you could just flip credit card offers and pay off.
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Re: $150,000 cash question....help
Old 07-08-2005, 08:15 AM   #7
 
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Re: $150,000 cash question....help

Quote:
Originally Posted by maddythebeagle
4.25% then prime

I think the fed isnt going to stop anytime soon. why would you want it at prime rate.

you could just flip credit card offers and pay off.
could u elaborate on "flip credit card offers and pay off" i did not get the message
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Re: $150,000 cash question....help
Old 07-08-2005, 12:18 PM   #8
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Re: $150,000 cash question....help

I am not a fan of buying into rentals at todays prices (I've been a seller since 2000). But rolling the proceeds from one property to another could be seen as a lateral move - albeit at a higher price. A 1031 exchange will make the transaction tax defered. Here's a link to info on exchanges:

http://www.allstates1031.com/

Good Luck!
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Re: $150,000 cash question....help
Old 07-08-2005, 04:57 PM   #9
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Re: $150,000 cash question....help

I am not a fan of buying any real estate except my current residence. That is just me. I dont understand real estate or find it very interesting or want the hassles. Seems like a lot of it is subjective too (what's it value, whatever somebody will pay). It doesnt satisify my analytical cookie center.

CC flipping is just transfering balances every 12 months from one card to another. You could pay off as you go. Just dont add any new charges to the card and make sure you pay at least the min. every month or you are screwed. I use an auto. bill paying system. Like every thing else, dont get in over your head.
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Re: $150,000 cash question....help
Old 07-09-2005, 12:13 PM   #10
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Re: $150,000 cash question....help

Cash out, pay off the debt, live frugally, buy an airstream or a winnebago and tour while you figure out the next step...you may like it.
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Re: $150,000 cash question....help
Old 07-09-2005, 12:26 PM   #11
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Re: $150,000 cash question....help

Quote:
Originally Posted by LEX
Cash out, pay off the debt, live frugally, buy an airstream or a winnebago and tour while you figure out the next step...you may like it.
I like LEX's idea. This CC flipping is fun (and it must not seem like work or I wouldn't have anything to do with it - lazy as sin). Anyway,
working those low rate CC promotions can be very profitable and way less
headaches than landlording. Bottom line is: don't rush into anything unless
it's a no-brainer. BTW, my spouse always says "Do what you want!" too,
but that's mainly because she knows I will anyway

JG
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Re: $150,000 cash question....help
Old 07-09-2005, 08:32 PM   #12
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Re: $150,000 cash question....help

Do you love the house you are in? Want to stay there? If so, my two bits is to:

1.Sell the investement property, pay the capital gains, refinance the home equity loan and cc debt at these really low rates for a fixed 30 year plan, set up a Vanguard account and pick something like Wellington Admiral shares (how old are you?) and just chill for a while until you can research further.

Then you can determine if you want to pay off that loan early, invest more, etc.

But we only have a slice of your picture here, what is your income, age, are you maxing 401k/IRAs, married, single, what spouse is doing, your marginal tax bracket, etc.
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