Bought a house in East Bay 10 years ago for 850k with 300k down. The house is worth over 1.3M now. In there last 10 years our portfolio has grown to about 900k in stocks. We are now thinking about buying a second property ( ~2M SFH in East Bay), liquidating part or all of our stock portfolio. Apart from this we have about 1M combined in 401k. What would be a good long term strategy? Option 1, Keeping the money in the stock market. We have a diversified mix of mutual funds, indexes, FB, GOOG, other stocks, bonds ... Our average annual returns have been about 10% over the last 10 years. Option 2, sell all or part of the portfolio and use the money to buy a second property. rent the first property, will break even with rent against mortgage, property tax and maintenance. Our investment of 300k in the first home has grown to about 750k in 10 years, which is a return of 150%. It would be great to get something close to this in our second home in 10 years. Or other options? Household TC : 500k I have 15 YEO and my wife has 10 YOE #sanfrancisco
Damn, jingle all the way indeed
I wouldn't liquidate all stocks - that's too many eggs being put into a house. Also, I think you meant 450k?
Thanks. I meant the 300k investment has grown to 750k, net gain of 450k.
The stock may drop as well as real estate. Can diversify your money in both? Buy cheaper real estate and still keep some portion of your stock
I would liquidate some money from stocks, and buy a house outright *outside* the bay. Do some research on what is a good place. Then rent it out. Rinse, repeat.
I own two properties and going for third one in 2020 beside Vaguard Index Funds of 30K. Third one I want to buy in Austin for real cheap near Apple office and use a property manager.
Take equity out of your house and use that as downpayment for the second house. Keep stocks intact. Turn your first house into an LLC if possible
Sell the first house and get the $450k tax free. If you rent it out then you loose the tax benefits after 3yrs. Use the proceeds to buy new house and maybe a rental property in Sbay or peninsula.
Rental is the way to go though. Free money after you pay off the mortgage.
What was the price of that 2m house 10 yrs ago? Selling first house to buy second doesn't make sense. Unless you want to keep moving every few years.
Other people already provided good recommendations. How much was your appreciation in stock? And what was your investment strategy?
Edit your post and make a poll