A Good Problem to Have

With my sister-n-law finally moving out of my in-laws house we are now able to sell it.

My wife’s parents passed away in 2008. We inherited a paid off house in a nearby town. It has taken awhile(years and years) for my sister-n-law to be ready emotionally and financially to get a place of her own. Our good friends are actually buying the house. They need the bigger space and I do not want to work to get the house into ‘showing shape‘. We are glad we can help out friends and they are getting a pretty good deal.

Can you guess which real estate it is?

All said and done we will clear $132,000. What to do next is the dilemma. For various reason spelled out in earlier post, we will not be giving half to my sister-n-law. We will be paying her a lifetime annuity month to month. So I get the whole lump sum to play with.

The way I see it forming up, I have 4 options;

  1. Increase my passive income through rental properties. I could easily buy a duplex with this money. We would see a positive cash flow (call it $700/month) from here on out. This would provide a stream of money coming in while building equity. It fills a glaring gap in my income diversity(real estate).
  2. Increase my passive income through continued dividend investment. I already have a healthy portfolio. $135k can easily translate to almost $400/month with very little downside.
  3. Decrease my debt load. My wife and I still owe about $90k in student loans. We also have a HELOC balance of about another $25k. This house windfall could ZERO out those balances, saving $380/month in interest.
  4. I could spread it over a lot of different accounts. I would take the money, pay off maybe one outstanding loan. Next, beef up the cash holdings, invest a good chunk in the markets. Finally, get the kitchen updated and still sit back with a sizable amount waiting for the next good opportunity.

This article was not written just to create a new post. Although I admit I am the guy who when making a list, adds things to the list I have already done so that I can scratch some things off right out of the gate.(I’m List Happy). I have truly been somewhat frozen about making this decision. I can see the merit in all 4 paths and have made no progress is eliminating any of them.

Your thoughts on the matter would greatly be appreciated.

UPDATE 04/10/2017 – We CLOSED on the House, HERE is what we have done with the Money so far….including getting my sister-n-law some real estate of her own.

11 thoughts on “A Good Problem to Have

  1. With your current sizeable dividend account I would personally pay off those student loans. Option 2. Get that done and gone all the while updating the kitchen. And investing the rest of the 20k in stocks

  2. I’m a huge fan of getting rid of any debt. But I also love real estate investments (but don’t have any besides my own house). So I am torn with what to do here.

    The no risk thing is to pay off the debts. Though if there was a smoking deal on a duplex, I would let the debts ride.

  3. As I hate debt, I would kill debt as soon as possible.
    When the student repayment loan has a return almost the same as building up dividend income, then in my books, the money would go to the student loans. The cashflow from this can then be reinvested every month.

  4. I don’t know, it’s 50/50, I don’t like Heloc loan, if student loan interests is >4%, I’d pay student loan, I use 4% dividend yield as average.

    If you feel like you can take on a duplex, then do it, hehe, otherwise, playing safe.

    What amount are you agreeing on paying sister in law per month? $200 or $400?

  5. The sister-n-law payment will be $300/month. The money from the sale could also be a 20% down payment on an 8plex with cash flow up $2k/month, but is a serious investment at 525k

    • Great Minds think alike, we paid off all the student loans and have a pile of money waiting for the right real estate to pop up.

Let's get things nice and sparkling clear