Should I, or shouldn't I?

2012 was a big year for me.  Not only did I pay off the mortgage on my primary residence (WOOT!), but I also bought an investment property - a duplex - using cash.  Life with no debt is good!  It suits me just fine.

So it likely shocks you all as much it does me that I am considering taking on another mortgage.


Let me explain....

I have quite enjoyed my time as a landlord and had hoped to get a couple more properties in the coming years.  Well, lo and behold, a very nice property near me has come on the market.  This time it is a 4-plex.  It is in a great location, priced well, and generates great income with what I have been told were long-time tenants.  I ticks every box on my wish list.

And while I loath the idea of taking out another loan, I also know that right now many of my cash assets are tied up in stocks that pay me very generous dividends (most in the 5-10% range).  And with the interest rates still low, it is actually a financially better option to take on a mortgage and not sell any of the stock.  And even with paying the mortgage, it appear this property will still be a profit generator for me (which is, after all, the whole point of getting into the income property market).

Still thinking, and deciding, and fretting, but I am serious enough that I am planning to look at the property on Wednesday.  And if I decide to go ahead with the purchase you can expect to hear about some serious frugality from me since my goal will be to pay off the mortgage in lightning-fast time.  :)

So what would YOU do?  Give up a life of no debt in order to generate more monthly income?  Sell the stocks and buy in cash?  Run fast and far from taking on more responsibility?  I want to hear your thoughts and advice.  


Grayson @ Debt RoundUp said...

I say go for it. Yes, the debt free lifestyle is nice, but you can have the revenue driven lifestyle. I think in this case, the mortgage would could be a good thing.

Jackie said...

I would just wait and pay cash in the future. Another opportunity will come along, and you became debt free for a reason.

krantcents said...

It depends on your overall goat. If you are trying to build assets and you are willing to use the additional cash flow to repay the debt, go for it. If you need the cash flow to live or for some other purpose, don't do it.

Lisa Richardson said...

Hi Denise,
I think you are completely capable of taking on that mortgage and successfully managing the property. Good for you for following your dreams.

KK@ Student Debt Survivor said...

I agree with Krantcents, depends on your overall goal. If being debt free is more important to you than building a real estate portfolio, wait and buy with cash. If having the mortgage doesn't bother you and you'll be making money and paying if off aggressively, I say go for it.

Anonymous said...

If you sell your stocks and pay cash would you have all of your investment dollars in real estate? If so, then you have too many eggs in one basket.

I am also debt free and have passed on "good" deals to remain that way so my biased advice is for you to continue to save and wait for the next deal that you can pay cash for - assuming it doesn't put too many eggs in one basket.

Your Daily Finance said...

First congrats on paying off the mortgage and being debt free. As for the mortgage it seems like you have a plan and have already made the real estate investments work in your favor. I would say take out the mortgage if it helps you out. Im just getting into real estate and have to use hard money or wholesale. You have the option of bank loan or cash which is great. Its just depends on if you want the debt or not.

The Phroogal Jason said...

I think good debt is debt that is turned into income generation. Debt like cars, financing TVs, etc are examples of debt no one should take on.

Crystal said...

I would do it, but I also bought our dream house with a mortgage knowing that I would have been debt free if we had waited 3-4 years. But rental properties are just too awesome to pass up.

Jeremy Norton said...

As much as I wanted it, I would rather not go into debts. I am trying to avoid debts as much as possible.

The College Investor said...

I think you have everything pretty covered, and for as long as it's not going to be so tough,go ahead and do it!

Jeremy Norton said...

Being debt-free is really a great feeling. But sometimes, debt is good when you know that at the end you will be making a great deal.

PhroogalJason said...

Debt isn't necessary unless it's used as an investment. I look at mortgages as debt used for investment purposes and mortgage rates are lower than what you can make on stock at the moment.

Kevin @ said...

My suggestion would be you should go for it. Since your are investing in a good thing, you will get benefit in long run. Whatever decision you take; let us know about it. Best of luck.

Simon @ strengthenyourshot said...

Little but nice post. I think you have everything fairly protected, and for provided that it's not going to be so challenging,go forward and do it! thanks.

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