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Started By
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Purchase, land question
Posted on 10/10/18 at 8:48 pm
Posted on 10/10/18 at 8:48 pm
My wife and I live comfortably, both professional, mid 30s. Make combined 250. Max 401k each year and have a Roth rollover (wife's previous job). Combine retirement is 500k at this time. Cash on hand is about 50k. Have a separate account in the market worth about 140k. Jobs are incredibly stable. Bonus adds another 20k per year (after taxes).
Looking to buy a second property for hunting and rec with the kids. Looking at 180k for 40 acres.
We have two car payments and a mortgage. Outgoing with those are about is 4800.
Are we nuts to draining the 140k account and taking a loan for the balance?
Looking for input. I feel we are money savvy, but something seems/feels wrong with the approach.
Looking to buy a second property for hunting and rec with the kids. Looking at 180k for 40 acres.
We have two car payments and a mortgage. Outgoing with those are about is 4800.
Are we nuts to draining the 140k account and taking a loan for the balance?
Looking for input. I feel we are money savvy, but something seems/feels wrong with the approach.
14
Posted on 10/10/18 at 8:57 pm to littlePNdaB
What would the interest rate on the loan be? If that's what you want to do with your money you can certainly afford it, but completely draining the market account doesnt really seem like the most prudent move to me, depending on the rate of course.
Why not put like 80 or 90 down and carry a little larger note?
Why not put like 80 or 90 down and carry a little larger note?
Posted on 10/10/18 at 9:02 pm to Mingo Was His NameO
Rates on land, with a credit score of 810 is 6%. The balance comes from home equity loan... similar rates... trying minimize loan size, but maybe we shouldn't. Plan to pay of the loan with bonus each year, be scott free in 2 years, focus on rebuilding the market account.
Posted on 10/10/18 at 9:05 pm to littlePNdaB
quote:
Rates on land, with a credit score of 810 is 6%. The balance comes from home equity loan... similar rates... trying minimize loan size, but maybe we shouldn't. Plan to pay of the loan with bonus each year, be scott free in 2 years, focus on rebuilding the market account.
I don't think either way is really wrong over the other, but 6% really isn't awful. If returns on the market account creep down towards that number you could sell then and pay off the loan. Personally, I just wouldn't want to liquidate my entire market account and it'll only cost you about a year, maybe 2, on the life of the loan
Posted on 10/10/18 at 9:13 pm to Mingo Was His NameO
Bonus question, let's say we liquidate the market account, how are we looking for for retirement, say targeting 57 to 60.
Posted on 10/10/18 at 9:18 pm to littlePNdaB
Personally, I’d pay off the cars and then the mortgage before I considered a 2nd property.
I’m retired now but I can’t say enough about living within your means without debt before living outside your means with debt.
Leave the leverage model to companies playing with other people’s capital.
When I was your age my goal was financial independence.
Good luck!
I’m retired now but I can’t say enough about living within your means without debt before living outside your means with debt.
Leave the leverage model to companies playing with other people’s capital.
When I was your age my goal was financial independence.
Good luck!
Posted on 10/10/18 at 9:23 pm to Cajun Cricket
quote:
Personally, I’d pay off the cars and then the mortgage before I considered a 2nd property.
Theyre going to have several million in retirement at their current pace by 60. Buying 180k worth of land (that is an investment in itself) is not going to hinder their financial independence.
Posted on 10/10/18 at 9:32 pm to littlePNdaB
Your retirement depends on several factors, including number of kids and lifestyle. Your current income levels will give you plenty of options though ... such as raising kids with a single income and a stay at home parent, etc.
My recommendation is to set aside as much as you can early on and to invest fairly conservatively.
Depending on your family size goals, you could easily have upper 7 figures by 55 ... but that will take discipline and patience.
Again, good luck!
My recommendation is to set aside as much as you can early on and to invest fairly conservatively.
Depending on your family size goals, you could easily have upper 7 figures by 55 ... but that will take discipline and patience.
Again, good luck!
Posted on 10/10/18 at 9:38 pm to Mingo Was His NameO
I don’t disagree with this at all ....
However, owning property leads to owning toys, owning toys leads to liability insurance, etc.
One could argue that with his net worth even today he doesnt need comprehensive auto insurance and by simply having a loan he is required to have it. Just that simple fact would lead me to not have a car note and carry liability.
To me, it’s a mindset.
However, owning property leads to owning toys, owning toys leads to liability insurance, etc.
One could argue that with his net worth even today he doesnt need comprehensive auto insurance and by simply having a loan he is required to have it. Just that simple fact would lead me to not have a car note and carry liability.
To me, it’s a mindset.
Posted on 10/10/18 at 9:46 pm to littlePNdaB
Buy the land, bought a piece last year and we love it, but set it up as a timber company ( become a pine tree farmer) finance through a land bank, ( I would finance a large chunk of it and use cash on hand for tractors, 4 wheelers, camp, etc... which all may be business expenses which along with interest and mileage to and from may be able to used to your advantage tax wise)
Posted on 10/10/18 at 10:02 pm to littlePNdaB
Land is hardly ever a bad investment. Especially at that price.
Posted on 10/10/18 at 10:28 pm to littlePNdaB
quote:
My wife and I live comfortably, both professional, mid 30s. Make combined 250. Max 401k each year and have a Roth rollover (wife's previous job). Combine retirement is 500k at this time. Cash on hand is about 50k. Have a separate account in the market worth about 140k. Jobs are incredibly stable. Bonus adds another 20k per year (after taxes).
Looking to buy a second property for hunting and rec with the kids. Looking at 180k for 40 acres.
We have two car payments and a mortgage. Outgoing with those are about is 4800.
Are we nuts to draining the 140k account and taking a loan for the balance?
Looking for input. I feel we are money savvy, but something seems/feels wrong with the approach.
You make great money.
Pay off both your cars and your mortgage first. Having two properties is extremely expensive. My grandfather did this and it had him going back and forth from home to home. Believe me, as soon as you do this you are going to want to start building on it and now you have two homes.
The wise decision would be leave your 401k alone. Sell the house you own and buy a cheaper house plus the property. You may not be able to get back your 180k from the land plus the taxes. One day you may want to retire to the property full time but now with a great 401k to spend on projects that you want to do. (homestead stuff)
This post was edited on 10/10/18 at 10:29 pm
Posted on 10/11/18 at 6:06 am to Mud_Till_May
Most of this board's advice is always don't spend money. Save for retirement. At some point you have to live your life. What good is it to retire with $10 million dollars (more than you would ever use), but miss out on memories in the way.
If you feel like this is something you want to do, go for it. Some of my best memories as a kid were spent riding four wheelers, fishing, and hunting at family land. Those memories and the closeness it brought our family are priceless.
Regarding the route of getting the land, but also would probably y to a hybrid approach. Maybe 1/2 from market account and finance the rest. It mitigates the risk of the market some, and allows for a much less sizeable loan.
Enjoy your life.
If you feel like this is something you want to do, go for it. Some of my best memories as a kid were spent riding four wheelers, fishing, and hunting at family land. Those memories and the closeness it brought our family are priceless.
Regarding the route of getting the land, but also would probably y to a hybrid approach. Maybe 1/2 from market account and finance the rest. It mitigates the risk of the market some, and allows for a much less sizeable loan.
Enjoy your life.
Posted on 10/11/18 at 7:54 am to littlePNdaB
The land will probably appreciate faster than the other investments. Lock it up
Posted on 10/11/18 at 8:01 am to Mr.Perfect
The value of the land itself will appreciate as well as the timber. I bought 130 acres of timberland last year that we use for hunting. Trees should be 20 years old when the kids go off to college. Plan to sell timber at that point then replant. The memories created at the property have been priceless.
Posted on 10/11/18 at 8:07 am to littlePNdaB
quote:
We have two car payments and a mortgage. Outgoing with those are about is 4800.
I would nuke that debt first.
quote:
Jobs are incredibly stable.
For now. You just never know what could happen. Think worst case scenario. What if one of you couldn't work starting tomorrow?
Posted on 10/11/18 at 8:34 am to CoachChappy
quote:
I would nuke that debt first.
They make 250k a year, and have 200k in cash available, $4800 is completely reasonable for house and cars.
Posted on 10/11/18 at 8:47 am to bayoudude
quote:
appreciate as well as the timber.
Careful, pine timber in the southeast is down 45% since 2007 and at a 50 year low. Everyone planting pine 30 years ago has put the south absolutely awash with it. Hardwood however is still decent.
Posted on 10/11/18 at 10:20 am to CoachChappy
If I cant work due to disability I have long term disability ins, get 66% of my income. Have 1 mill life ins, if that happens. The house is on a 15 year note and the cars are 0% and 2% interest.
Posted on 10/11/18 at 10:22 am to littlePNdaB
quote:
If I cant work due to disability I have long term disability ins, get 66% of my income. Have 1 mill life ins, if that happens. The house is on a 15 year note and the cars are 0% and 2% interest.
Enjoy the new camp baw
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