Hi From Columbus,OH - 30 and could use advice

[columbus]

Hello all,
I'm 30, have been married 3 years, we have no kids but are trying now.
We have our old $140k house(owned for 5 yrs) rented to a family that cash flows $100/mo, maybe $10k in equity now, 30 yr fixed rate around 5%, we are paying pmi.

We now live in a $160k house with 30yr fixed (owned for 1 yr) at around 6%, no pmi. Not much equity unless we can sell higher in the future...we got a great deal and made some improvements. We plan on renting it out as well in the future as it is in a desirable downtown location but not a good school district.

I have $50k in a roth ira and fund it each year
I have $2k in 401k and am maxing that out up to my employer match 10%
Wife has $4k in 401k and is maxing that out up to employer match
Our vehicles were bought with cash but may need something new soon but it would be another reasonable cash purchase unless a better deal is around.(currently $5k hyundai and $3k ford truck)

No debt except mortgages and wifes student loans of $8k at around 5%.

We have around $80k in ING and checking right now to buy an investment property but haven't been able to come across the right one yet.

Wondering if we should keep looking, possible pay off student loans, possibly pay off mortgage to avoid pmi but we can currently write it off just like interest? We are savers and are responsible except for the fact that we have sat on cash for a year that is getting less than 1%. I go back and forth but feel the cash is more valuable to invest in a rental property than it would be to pay off 5% and 6% debt? I guess I feel I would borrow at that rate to buy the property so I shouldn't limit my options. ...and it's cash.

My goal would be to retire/fire before 60, hopefully semi retire long before 60 or atleast have the option. I also read posts about how SS could pay out less based on assets/income in the future so I would like to possibly keep that in mind to try not to get screwed for being frugal/responsible.

**edit - forgot income..I make $60k, wife makes roughly $55k per year.

Sorry for the length, just wanted to get all the details out and see if anyone had any advice!

Thanks so much!

[Goblue1972]

if you have an oppty to make 5 or 6% rate of return by paying off the debt with no risk..ie. that would be a guaranteed return...then that seems like a better risk adjusted decision. real estate given your financial profile doesn't seem to make sense from my perspective. it can be a headach. and there are always unforseen costs.

[Aiming_4_55]

Welcome to the forum. You look like you are in decent shape.

A few thoughts for you:
- Before you move from your current residence, check into refinancing your current note. By me, I'm seeing no cost refi's for 30 yr fix at 5 - 5.25% rates with as little as 10% equity to avoid PMI.

- renting to family and renting to strangers = 2 different animals, be careful. Landlording is not for everyone. Renting to family, I find myself making more improvements than I do for the basic rentals to strangers.

- student loan is small unless you get credit saving for ontime payments reducing cost over time, it might be easier to just be done with that and not worry about the monthly payments.

[Trawler]

Welcome to the forum.
Good to see you are thinking about FIRE at your age. Looks clike you are of to a good start with your RE business. Being that you are saving and accumulating assets is great. If you are not already you want to track monthly household expenses. I would keep at least 6 months of expenses in saving for emergancy and fund for rental vacancey as well as a reserve fund for the rentals so you have cash on hand for repairs.
One thing that really helped us was DW and I as we grew into our careers and income was growing greater than inflation we increased monthly savings/investment when we recieved raises and bonuses we would split the difference spent half and saved half so we could enjoy along the way.

[columbus]

Thanks all, I'm renting to a family, not to a family member, sorry for confusion. There is no payoff savings to paying off the student loan except the interest obviously.

I should know but our current rate is pretty good, VA loan with no pmi. The old house was already refi'd and is pretty decent too, we had a first and second before the refi but now pay the pmi. I'm guessing we would have to pay roughly $20k build enough equity to drop the pmi. If it can't be written off in the future we may want to do that before the student loans.

My wife does a better job of tracking expenses, I just condition myself to be frugal and then check to see how much my accout has grown. I think that's why I feel nervous about not being as smart as possible with our money and having the bvulk of it sitting in an account not doing anything for us. I have a trading account with less than $1k in it that I could put some money into but then I figure that is a bad move if I need it for a downpayment on investment property and perhaps I should payoff debt instead and get the guaranteed 5-6%? I have actually been a very good stock picker but always sold at the worst possible time. If I buy stocks it would be buy and hold.

I guess as long as no one can talk me out of buying additional real estate as an investment then I will probably keep it in cash and keep looking for good property. If anyone knows any better investments let me know, I'm open. Also any better short term investments to park the cash until we need it for a downpayment.

[skyvue]

This is all personal preferences, but I wouldn't invest in another property right now. I think you have to big of a percentage of your assets in real estate. I would invest the money in some low cost mutual funds for your early retirement goals.

[columbus]

Thanks all, I checked and the two mortgages are at 4.75 and 5% so no need to refi.

[jIMOh]

At minimum do a cash flow analysis now, then look at paying off student loan and paying down mortgage with PMI to 22%, then redo same analysis.

[columbus]

DW looked into paying down mortgage and I guess we have to pay pmi for minimum of two years do that won't be until end of this year. We have inspection on a 3 unit this weekend, hopefully it works out.

[columbus]

Update - we ended uo finding a good 3 unit that should cash flow pretty well. We also just paid down the rental mortgage by 13k and got rid of pmi. We are getting ready to pay off the 7k in student loans which will leave about 10k left in cash. Bad news is we just picked up a 10k car loan at 4% but it should be a safe reliable long term vehicle. We also have a first baby on the way.

Any thoughts or advice? They say I can't pay off the car loan early. Thinking of throwing $1k into stocks and keep saving.

[SandsofTime]

Congratulations on the baby. When the baby comes, open up a College fund and put a little bit in it every month (auto deposit) Even $150/month will be good.
Here is my suggestion to you:
1. Pay off the car asap;
2. then pay off the student loans asap;
3. Instead of buying more homes, pay off the ones that you have already purchased;
4. Then work hard on paying off your primary residence;

Try not to over-leverage yourself. Once you have paid off the rentals, auto loans, primary house, student loans etc, then you and your wife can start working part-time.

[columbus]

Thanks sandsoftime, the student loan is a higher rate even with the writeoff. Any reason to still pay off the car loan first if its lower?