Mortgage payoff question

[Chud5380]

Hi all first post but frequent forum reader. Tv hank you for any replies.

Have two mortgages. First one was bought at peak real estate high in suburb of NY in 2007. Current value of condo is 100kish less than original purchase price. Has a 4.5% mortgage rate Currently renting it out and losing roughly 300 per month from break-even point. Currently live in another house with another mortgage. This has a 4% rate. Question: sell condo for loss? Pay extra principal to pay off in 5-6 years? Would think that would be good as we would be making 2k each month but is it really if we have been losing for years? Don't really want to use all of our cash to pay that off. Also would love advice on where to invest 75k of the liquid that is not high risk so we can begin to grow our money.

Here are current assets.

4.5% mortgage has 159K left on it ( 30 year fixed )
4% mortgage has 233,819K left on it ( currently living in this house) ( 30 year fixed

104K in ally account 1%
107k in ally account 1%
9k ally in account 1%

Stocks
99k current value ( 30k profit from original purchase price ) Many dividend earners. This is just my stock picks over the years.

403B account with voya
90k in balanced portfolio. 70k for wife in fixed 4%

529 plan
40k

Wife and I both teach and each have 100k income with pensions and are in our mid 30's with one toddler and another on way.

[greenskeeper]

Which mortgage is on the condo? The first? If so use cash to pay off the mortgage on the property. Once that is paid off you'd be making money on the property, take proceeds to rebuild cash savings, invest, etc.

[Chud5380]

the smaller mortgage is the condo. Yes my hope was to possibly develop a 5 year plan. I basically can pay 2600$ per month and then be done with the mortgage. That is 800 extra per month on my payment ( including escrow for the taxes ) From there on in I will be 40 years old and getting roughly 24k per year with relatively little aggravation and minor maintenance. Any other differening thoughts opinions?

[tripods68]

To me it's no brainer to pay off the condo completey. That's still give 3-6 months EF. You can rebuild your CashFlow easily after that.

[StormRichards]

Why so much with Ally earning next to nothing?

I would definitely pay off that condo. It may or may not be worth keeping at an investment. More information about the property and your goals would help determine that.

[Chud5380]

Way too much in Ally. I am thinking of putting 40 or 50k in a vanguard etf VTI. I can buy that through my tradeking account I think. We really needed a lot of cash on hand for some uncovered insurance medical issues. Condo is in a safe good location in the suburbs of NY. I would say rent would continue to increase over time. We have little repair to take care of other than incidental work that I usually do myself. Our goal would be to supplement our income and savings with the money that would come monthly ( once it is free and clear ). Thank you for all the replies.

[LivingAlmostLarge]

Is the condo a good investment? Is it worth keeping? Is it worth putting that money elsewhere? Are you chasing good money after bad? Evaluate the condo like a stock. Would you buy it today for $100k less? If not then sell.

Others with more property experience can weigh in. But I think you need to decide if the condo is part of your long term strategy. Personally with HOA I would think investing in RE in SFH is the way to go.

[Chud5380]

Thanks for the help. Yes those are really all good for me to consider. I don't think I am doing a good analysis of this. I keep emotionally thinking I am taking a 100k loss which does not feel good. I also was thinking in the future once it is paid off that the earnings from rent per month can actually pay the mortgage for my current house making me essentially "mortgage free" in a sense. I don't think any of this is a correct way of thinking.

[StormRichards]

Perhaps this Return On Investment calculator will help?

https://www.calcxml.com/calculators/inv04

I think what is important is to calculate what your expected return is long term and determine if your money is better off elsewhere.

I really think it would be beneficial to you to post all of the details regarding the condo. Purchase price, expenses, rental income, taxes, etc.

[Chud5380]

Thanks! Details.
Purchase price 320k
refinanced to a 4.5%

current price is around 240k or so

160K left on mortgage at the 4.5%

1900 rent currently. In the summer this will go to 2k. ( rent in NYC suburb traditionally is rising although this is no predictor for the future )

Taxes 5k per year which are escrowed.

minimal expenses in the hundreds as I do most of repairs.

Break even point for rent and all taxes, HOA and mortgage is 2200.

[Fishindude77]

That's a whole lot of debt for $100k income. I'd unload one of them asap.

[StormRichards]

That's a whole lot of debt for $100k income. I'd unload one of them asap.

They have $220k sitting in an Ally account. Doesn't necessarily have to get rid of either property, but I would definitely agree to get rid of the debt of the condo.

[Chud5380]

I agree it needs to be unloaded either by a sale or debt payoff. Our income is 200k not the 100k we have exactly same job and income to the penny lol

[greenskeeper]

Thanks for the help. Yes those are really all good for me to consider. I don't think I am doing a good analysis of this. I keep emotionally thinking I am taking a 100k loss which does not feel good. I also was thinking in the future once it is paid off that the earnings from rent per month can actually pay the mortgage for my current house making me essentially "mortgage free" in a sense. I don't think any of this is a correct way of thinking.

The loss is on paper until you sell, which by that time could become a profit.

To me it's a no brainer to pay off the condo with cash savings and then use the proceeds to either cover your existing mortgage payment or roll into another investment property.

This is similar to my "end-game" retirement as I plan to pay off my current house in less than 5 years (I'll be 42), buy a second home in the poconos and "retire" there (at retirement age) while renting out the first house to supplement retirement income.

[Chud5380]

Sounds like a great end game. I know it sounds crazy with that amount of cash but I am leaning towards paying extra principal for 2 or 3 years until getting closer to the end. At that point I would just add a lump sun to finish it. Due to some last experiences medically I really like keeping big cash sum for emergency. I was thinking of liquidating my stock account but I like my long term portfolio and I have a lot of stocks I bought during the downturn that are accidentally yielding 6-8%. Thanks for your reply.