[Music]
ben's with us in salt lake hey ben
what's up
hey dave hey rachel thank you for taking
my call
i've gotten an investment property and
i'm debating whether or not to sell it
i've got enough equity in it to pay off
my mortgage plus
you know quite a bit extra and i'm just
wondering if it makes sense to go ahead
and sell it
okay what do you what's it worth
best estimate is about 300k okay what's
your home worth
uh a b
750 800k
okay
all right
and how much you have left on your house
ben to pay off uh about 120
okay what's your household income
about 190. okay
all right well you can run the numbers
out both ways okay because here's the
goal the goal is to end up with zero
debt because that is your fastest
method to build wealth
okay
at least the most at least the fastest
right way to build wealth because it's
gonna it's gonna free up everything and
you're going to have the right direction
so if you had no payments making 190 but
you didn't have a
rental property anymore
you would probably begin to save towards
buying your next paid for investment
property wouldn't you
yes in 10 years from today you would
have paid for house paid for rental
property 10 years from today if you just
beat on both of these with 190 000
income you probably can work your way
through and be debt-free
on both of them by 10 years from today
right
yeah yeah when i run out the numbers
it's more like
four or five yeah okay so really the
trade-off is
four or five years the trade-off is not
i'm going to be in debt the rest of my
life because i don't make this decision
yeah yeah and the other side of that is
also the taxes that would be due if we
did sell it well that's one side of it
the other side of it is the peace and
freedom you would have without screwing
with a renter or a mortgage
and um very true you know so there's
trade-offs all the way around this deal
uh so i i think i i love investment real
estate if you listen to this for very
long you know that i own a bunch of it
personally but not everyone should own
real estate not everybody likes it
um and not everybody wants to mess with
it so this particular 300 000 investment
property um
you like it love it
don't care
um
like it okay so 10 years from now you'll
be glad you own it
yeah yes definitely okay
i'm probably just going to work through
paying them both off
okay okay that's excellent advice you
see how i got there
yeah yeah absolutely that's how i got
there is probably more important than
the actual advice
but um you know again if it was going to
take you 20 years
i you know if you told me you had an 80
000 income
uh i'd say your investment probably
about 30 seconds
right right no that's that's not the
case yeah but i mean you see what you
see how i'm analyzing that that's my
point
yeah yes i do okay cool okay so what's
your threshold then i thought you were
going to say something different
really
yeah i thought you would say
sell it pay off the house
five years five years about my threshold
okay that's that was my question if he
can clear the deck in five years five
years
same thing on paying off your car okay
think about your car okay what do we
tell people we tell people yeah you can
get off
18 20 18 24 months right yeah then it's
okay but if it's gonna take you four
years so why wouldn't you just sell the
car every time
because you're gonna turn around buy
another one
yeah but a cheaper one i know but i'm
saying if you pay if you could pay out
the car in 18 months and you sell it
today to get off debt get out of debt
you're going to be turned around buying
another car
in 18 months
so it's you know you it just was a
dollar swap
in other words the car was not weighing
you down to the point you couldn't get
out of debt right
right and the same thing's true here the
five year mark on yes because he can
clear his mortgage
and his house yeah when most of the
people following the baby steps are
debt-free house and everything takes
them about seven to eight years to pay
off their home alone just the home right
right but because he has an inordinately
high is an inordinately high income in
relation to his mortgages yes yep then
he can knock it out he could do both but
again if it was going to drag out 12
years i'd have flipped it sure sure and
the thing that would have caused that to
happen would ben if his income is lower
yes okay but then on the other end
though
he sells it
gets he's 100 percent free yeah 100 free
and then he goes and buys a rental a
cheaper rental later three or four or
five years from now so he's back in the
rental business and either way at the
end of five to seven still in the rental
business at the end of five or seven
years he has a paid for mortgage and
rental business at the end of 18 months
you still got a nice car yep you just
had you didn't have to flip in and out
of it was all true that's the difference
and so if this was like who wants to be
a millionaire or some game show i would
have lost
what well
i really was like expecting you
to say sell it and sell it and pay off
the mortgage have the piece have your
extra cash and if you want to go buy
something else later
and cash com you know and of course
there's another element to this he likes
the rental property
fair if he said you know it's a bad
neighborhood i'm not that thrilled with
it i probably wouldn't buy it again then
sure
let's go ahead and flip it out now yep
you know but he's like he didn't love it
if his mortgage was different if his
mortgage was different his income was
different or if he liked the didn't like
the property we've got a different
answer
all right
you learn something new every day