[quote=plm]Didn’t realize a rental was an investment instead of a business. In this case I should be able to cash out some of my stock gains and pay off my mortgage. Then I can also get a mortgage on my rental and buy stocks. Although lately my stocks have been going down while the market is up but that’s another problem.[/quote]
I’m not sure I follow about cashing out stocks and paying off mortgage, only to turn around and borrow against the home to buy stocks again….If you do that…
1. You pay capital gains taxes on your stock sales.
2. You pay off a mortgage, and then take another mortgage out, you incur a new loan with most likely higher interest.
3. You run the risk that if you pick the wrong stocks or just invest at the wrong time in the stock market, you are now stuck with paying a mortgage to fund your stock losses.
4. If you now have rental issues (like lapse in tenants, or the general health of the rental markets goes down)….now that’s coming out of your pockets.
5. Depending on how much the rest of your income, you might not be able to offset real estate losses against your W2/salaried income.
Basically, you’re significantly increasing your financial risk, but I’m not seeing the potential of much greater financial reward beyond what you already have. Why take on increased risk, if the amount of reward does not significantly increase?
