House values on the raise here

[Bill Douglas]

I don't know what's going to happen in the future but it's been good so far for me. It beats the hell out of working with computers. My GF and I have 9 places, mainly beachfront, and I spend my time doing new bathrooms, painting outsides, plastering and painting indoors, putting in french doors and decks. It's a great life and the places are nearly paid off. The secret was to move the equity from a cheap place into a bigger better more expensive place that had a proportionally higher rent coming in. So nothing actually made any money but the dept/equity ratio was such that the rent payed the mortgage. And enough for petrol and booze for me. And the equity increase has been amazing. One property going up 15% per year is a bit of money, but 9 going up 15% a year is lots.

[Moneyguy1]

Everyone approaches the problem from their own unique perspective. I paid off my mortgage as fast as possible; payments 2x to 3x the original payment. Once paid off, I invested the same amount as if I still had to make the payments. I have not "run the numbers" to determine if this was the wisest course of action, but I do have a nice house, F&C; worth a lot if in the future I need cash or want more income (reverse mortgage), I have sufficient investments to provide a comfortable if not opulent lifestyle and I still carry the frugal nature that I was taught as a young'un.

No monthly mortgage payments. No car payments. No outstanding credit card balances (I hate paying interest). Automatic payment of utilities and such from the checking account (the payments are taken out at the last due date, leaving the account to accrue interest a bit longer)

I agree with the concept of leverage, but there comes a time when constant cash flow and predictable income streams trump speculation.

[LakeCleElum]

Originally posted by Moneyguy1
Everyone approaches the problem from their own unique perspective. I paid off my mortgage as fast as possible; payments 2x to 3x the original payment. Once paid off, I invested the same amount as if I still had to make the payments. I have not "run the numbers" to determine if this was the wisest course of action, but I do have a nice house, F&C; worth a lot if in the future I need cash or want more income (reverse mortgage), I have sufficient investments to provide a comfortable if not opulent lifestyle and I still carry the frugal nature that I was taught as a young'un.

No monthly mortgage payments. No car payments. No outstanding credit card balances (I hate paying interest). Automatic payment of utilities and such from the checking account (the payments are taken out at the last due date, leaving the account to accrue interest a bit longer)

I agree with the concept of leverage, but there comes a time when constant cash flow and predictable income streams trump speculation.

Smart guy.....And you're also named Bob S...

[dmcummins]

Originally posted by Moneyguy1
Everyone approaches the problem from their own unique perspective. I paid off my mortgage as fast as possible; payments 2x to 3x the original payment. Once paid off, I invested the same amount as if I still had to make the payments. I have not "run the numbers" to determine if this was the wisest course of action, but I do have a nice house, F&C; worth a lot if in the future I need cash or want more income (reverse mortgage), I have sufficient investments to provide a comfortable if not opulent lifestyle and I still carry the frugal nature that I was taught as a young'un.

No monthly mortgage payments. No car payments. No outstanding credit card balances (I hate paying interest). Automatic payment of utilities and such from the checking account (the payments are taken out at the last due date, leaving the account to accrue interest a bit longer)

I agree with the concept of leverage, but there comes a time when constant cash flow and predictable income streams trump speculation.

I'm with you, and I just recently retired at 49. No mortgage means I don't have to withdraw as much from my investments to maintain my standard of living. Keeps my taxes lower also. While I agree that over time investments in stocks should outperform, with a paid off house I'm comfortable being more heavily invested in the market. I reduce my bond exposure as I don't have to pay rent or a mortgage payment.

[dmcummins]

Home prices here, I live outside St. Louis have never really went crazy like other places. I paid around $230,000 for my home in 2001, it's probably worth around $275,000 today. I don't think prices have dropped over the last few years but they never went up that fast to begin with. Here is a pic not long after the home was finished, around the 4th of july. Now I did sell some land for a very nice profit and lots seem to continue to rise in price.

[KFC911]

Originally posted by Moneyguy1
Everyone approaches the problem from their own unique perspective. I paid off my mortgage as fast as possible; payments 2x to 3x the original payment. Once paid off, I invested the same amount as if I still had to make the payments. I have not "run the numbers" to determine if this was the wisest course of action, but I do have a nice house, F&C; worth a lot if in the future I need cash or want more income (reverse mortgage), I have sufficient investments to provide a comfortable if not opulent lifestyle and I still carry the frugal nature that I was taught as a young'un.

No monthly mortgage payments. No car payments. No outstanding credit card balances (I hate paying interest). Automatic payment of utilities and such from the checking account (the payments are taken out at the last due date, leaving the account to accrue interest a bit longer)

I agree with the concept of leverage, but there comes a time when constant cash flow and predictable income streams trump speculation.

That's the way I've always approached it too...

[Moneyguy1]

Wayne:

When I use the word "speculation", I use it in the broadest terms. Any investment without a "guaranteed certain" payout is, in my usage, "speculation". This makes stocks, real estate and such speculative because (1) outside events can influence these investments more than less "risky" ones and (2) markets, whether they be real estate or stocks are impossible to accurately predict since they are based more on emotion than logic.

Please note I use the words "impossible to accurately predict". There are those who will argue with that, but it is the truth, based on years of market analysis and not by me. Trends, yes. Precise rise/fall, no.

[72doug2,2S]

Speculation aside,
True there are different approaches written here, but none of those are financially consistent. IMO, the investment to make at anyone time is the one paying the highest return. That means, at times, it's better to invest in the market than your mortgage and there are times investing in your mortgage is the best return on your money. Taxes, mortgage rates, are factored in, investing in your personal mortgage is a tax free investment.

Return doesn't always need to be thought of as the money paid to you, it can also be money you don't have to pay out.

The bottom line is you put your money where it returns the most.

[alf]

A very good article here on this very topic.

http://news.yahoo.com/s/fool/20070518/bs_fool_fool/117951154741;_ylt=AuWmnsbjYM5SzS8XC.hmEQUE1vAI

[Moneyguy1]

Higher return = higher risk. Add that to your computations. Determine, even if it is only an estimate the chance of loss. The investment in which you put your money pays a higher interest because of the potential risk involved. Anyone here who has, in the past, taken a chance on something wildly speculative and wound up taking a bath will attest to that. I've done it in my earlier years....Readex...a sure bet.....reading utility meters from the air......Yup.......

[KFC911]

Originally posted by alf
A very good article here on this very topic.

http://news.yahoo.com/s/fool/20070518/bs_fool_fool/117951154741;_ylt=AuWmnsbjYM5SzS8XC.hmEQUE1vAI

Nothing wrong with that approach either...I like a good diversified mixture of both.