Hello all, sorry for the long winded post but I am seeking some advice.
My wife and I built a house five years ago in a rural area. The property next to ours is fairly dilapidated. The house has caught on fire (but still standing), the septic tank does not work, and it is uninhabitable. It sits next to our property and is a continual eye sore.
The house was recently purchased on back taxes and foreclosed. Currently, a property company owns the title and is trying to sell it. My wife and I are pondering the purchase, however, we don’t have the cash outright. Here are our statistics:
100k income per year in stable industries
Around $125k in home equity
- 3.5% mortgage and we’re not moving, likely ever
$50k in liquid investments (IRA/401k)
I pay into a state pension
I would like to purchase the property (no hard asking price yet but somewhere in the 10-20k range) mostly because we want the land before someone buys it, puts a trailer there, and rents in to people who might be considered dangerous (specifically, drug addicts). Since we can’t purchase it outright with cash on hand, I basically have two options that I know of:
Home equity loan
Roth IRA contribution withdrawal
The loan would be in the 8.6-9% range. A potential withdrawal would not incur taxes as we’ve contributed well over the amount needed. I should say that in the next four years, my salary will increase by 20% (contractual) and we will no longer have to worry about daycare which would allow us to increase contributions to the Roths greatly. It would basically be a short term withdrawal to purchase this property and then we would hammer down on the investments.
I’m basically looking for any other options or advice. Ideally I’d do this without debt, but in so doing, there is an opportunity cost to our investment portfolio. Thanks in advance!
My wife and I built a house five years ago in a rural area. The property next to ours is fairly dilapidated. The house has caught on fire (but still standing), the septic tank does not work, and it is uninhabitable. It sits next to our property and is a continual eye sore.
The house was recently purchased on back taxes and foreclosed. Currently, a property company owns the title and is trying to sell it. My wife and I are pondering the purchase, however, we don’t have the cash outright. Here are our statistics:
100k income per year in stable industries
Around $125k in home equity
- 3.5% mortgage and we’re not moving, likely ever
$50k in liquid investments (IRA/401k)
I pay into a state pension
I would like to purchase the property (no hard asking price yet but somewhere in the 10-20k range) mostly because we want the land before someone buys it, puts a trailer there, and rents in to people who might be considered dangerous (specifically, drug addicts). Since we can’t purchase it outright with cash on hand, I basically have two options that I know of:
Home equity loan
Roth IRA contribution withdrawal
The loan would be in the 8.6-9% range. A potential withdrawal would not incur taxes as we’ve contributed well over the amount needed. I should say that in the next four years, my salary will increase by 20% (contractual) and we will no longer have to worry about daycare which would allow us to increase contributions to the Roths greatly. It would basically be a short term withdrawal to purchase this property and then we would hammer down on the investments.
I’m basically looking for any other options or advice. Ideally I’d do this without debt, but in so doing, there is an opportunity cost to our investment portfolio. Thanks in advance!
Statistics: Posted by ruralteaching — Sat Jan 13, 2024 3:42 pm — Replies 2 — Views 177