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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. If you watch some of those home improvement shows, you might be tempted to think that flipping houses is easy and profitable, and you'd be half right half the time. But the truth is, flipping a house is never easy, and it's only profitable if you manage to do it right. Today, Kingdom Advisors President Rob West has a list of reasons a house flip can go wrong, just in case you're tempted to try it.
And it's your calls at 800-525-7000, 800-525-7000. I'm Steve Moore, the perils of house flipping, next on MoneyWise Live. Well, Rob, you know those house flipping shows always have some drama, but before the episode ends, things usually turn out, and the flipper makes money, good money typically. So why do you suppose they rarely show people losing money on a flip? Because it wouldn't make for great TV, and people wouldn't want to watch. Perhaps that's the reason. So instead, we typically see a happy ending with those shows. Are you saying, sir, that reality TV is something of a misnomer? People maybe lose money on some flips, and, well, you're going to tell us why today, I suspect.
What do you have for us? Well, it's a good point, and you're exactly right. You know, the overall reason, Steve, is a lack of understanding of all the reasons that can go wrong. Going into it with a pie-in-the-sky attitude, perhaps, but a lot of things can make that pie land right on your face. The first one is this, minimizing the potential to lose money. You know, house flipping is a form of real estate investing and a high-risk one at that. You see people making 10 or even 20% profit on a TV with a flip, but what stock could you buy that might give you that much gain with out exceptional risk? Well, I can't think of one. All right, well, just ask the folks who've lost their shirts on their brother-in-law's hot stock tip.
Maybe you could find out there. Okay, what else can go wrong with a flip? Yeah, next would be underestimating the amount of money you'll need for the flip, not just to rehab the property but to hold on to it before you're able to sell. Even if you intend to do a lot of the work yourself, a flip is still expensive, and especially now with our current home building boom, material prices are way up.
Then there's the holding part of the process. One thing that is real on those TV shows is the scramble to get the rehab completed and on the market. That's because unless you bought with cash, you're paying closing costs and an extra mortgage payment every month you hold the property, and that's of course chewing right into your profit. Then consider that the average flip takes from three to six months, and you start to get the picture.
It's always about the money, huh? Well, money and time, and about the only way you can avoid that time money pressure is if you live in the house while you're doing the rehab. That way you're only making one mortgage payment. There's one more thing related to money that can go wrong with a house flip, Steve, and that's a higher tax bill. Let's say you're successful in completing the flip and selling the property, and you make money. Well, since it's probably not your primary residence, you'll have to pay capital gains on that profit. That's another thing they don't show on TV, and since the goal is to flip the property as quickly as possible, you'll likely do it in less than a year.
Well, that means you'll have to pay taxes at the short-term capital gains rate, which unlike a typical long-term rate of 15%, you'll probably end up paying 22%, 24%, could be even 32% in taxes depending upon your household income. All right, that wouldn't be good. Okay, what else?
Anything else? Yeah, this one is also about time, and that is specifically budgeting time. Even folks who flip houses as their regular job will tell you that it's a time-consuming business. A simple task that you budgeted an hour or two to complete may end up taking an entire day.
Meanwhile, the clock is ticking, again costing you money. And if you're only doing this part-time, let's say nights and weekends, while you work a full-time job elsewhere, the time and cost to get the job done go up dramatically. Okay, makes me want to jump right in with my saw and my hammer, or maybe not.
Okay, anything else? Well, the next one would be overestimating your physical abilities, not just whether you have the construction skills to do the flip, that's of course important, but also whether you simply have the physical stamina. You may plan on having professional contractors come in for things like electrical and plumbing, but that still leaves a lot of work. You know, flipping houses generally requires long days of hard manual labor, hauling 25-pound boxes of ceramic tiles and the like.
There's also the emotional toll, Steve, that can take a lot of, put a lot of stress on you and your marriage. So, let's just say you need to go in with your eyes wide open before you approach this kind of project. Great information, Rob.
Hey, we'll come back and chat some more. This is MoneyWise Live. Welcome back to MoneyWise Live. For a couple of minutes today, we're examining the concept of flipping houses, something you see on TV all the time now that there are 150 or 550 channels. Lots of people out there flipping houses makes for entertaining TV. Doesn't always work out in real life if you believe what you hear.
In fact, Rob, we've had a couple of comments here. Our Facebook question of the day is, how successful would you be flipping a house for profit? Lisa says, depends on the market.
If you can buy when prices are down and hang on to it for a while, then do it yourself, then sell when the market goes back up, then probably pretty successful. Sounds like maybe Lisa has done this. Joy says, I've always had an interest in doing that, watch the TV shows, etc. But I don't know, and she leaves it hanging there. And maybe if you don't know, you better not do it.
I don't know. What do you think? Perhaps, Bob weighed in and said, I've done it twice. And with planning and budgeting, it can turn a nice profit. So obviously, Bob's allowed it to work for him. James raises an interesting point. He says, you know, a lot of times when you're doing a house flip, you might use superficial coverings of floors and cabinets, bathroom tile, maybe cut some corners, do it on the cheap to get it sold, where you're always just looking for what somebody might see and then pay top dollar for. And he's saying as a Christian, we need to be sure we're doing the right thing and not just covering something up to get it sold. And I think certainly we always need to be operating with integrity.
You know, I might just finish this segment, Steve, by saying, we're not trying to throw cold water on this for everyone. We're just saying go in with your eyes wide open. There are plenty of people that are very successful flipping helms. You know, they tend to be quite knowledgeable about the local real estate market. Many of them will often have their own real estate license. They're typically good at estimating time and costs for all aspects of the project, including how long it's going to take to actually get it sold. And many of them have considerable construction skills, which allows them to at the very least oversee as a knowledgeable expert, the work that's being done, if not do a good bit of it themselves. So just make sure you have the right skill set, the right temperament, the right staying power, the right cash reserves before you take something like this on. Yeah, and I think the DIY part is so important.
If you have to pay everyone to do everything on the house that you're wanting to flip, that can get really pricey. On the flip side of that, if you've broken more than one thumb while hanging a picture with a hammer, then you probably take that as a sign. Take that as a sign. You're not speaking from experience on that, are you?
No, but I did a real job on one of my eyes once and well that's a story for another day, but you have to know what end of the hammer to hold. That's a good start. Yeah, that's a great starting point.
They call them claw hammers for a reason. Okay, here's our phone number 800-525-7000. Give us a call today if you have a question about anything financial, not just about flipping houses. We're not particular experts there, but as Rob said, you want to go in with your eyes wide open. Make sure you're well planned and well budgeted for something like that. 800-525-7000 out to Grand Rapids, Michigan. TJ, my friend, nice to talk with you today.
What's on your mind? Yes, recently I was at a store retail that I needed to buy a bed and they had a promotion going on 18 months, same as cash, and so my wife and I, even though we had the money to pay for it, we thought well we could use their money for the next 18 months and just pay it off a little each time, making sure that we got it paid off in time. And we ended up receiving a credit card to this same retailer and it's at 29.99% and we didn't know that it was going to be on a credit card.
We weren't told that. I thought it was just going to be more of a simple loan type where you just make monthly payments and as long as you get paid off in time, everything's fine. But is that a normal practice and what happens if I don't activate the card? Yeah, let me ask TJ, what ended up happening with the purchase? Did you make the purchase with cash there in the store or did you actually use this financing option?
We used the financing option because of the fact that we just thought it would just be kind of a simple loan and like I said, we had the money so we're going to get it paid off in time. Sure, so when you got your first statement, you're seeing the balance but they're also giving you charging privileges to charge more. Is that what's going on? Yes, correct and I really don't want that credit card so I'm trying to figure out how to get rid of it. Right, right.
Well, I think the key is what you're experiencing is not uncommon. I mean, they're trying to get you to spend more because remember every time you spend beyond this initial purchase, they have the merchant rebate, not to mention the fact that they want you to start carrying a balance where they can actually charge you some interest because they've agreed not to charge you interest for the first 18 months on that initial transaction. So I would just say don't activate it and just keep paying this on this current loan that you have where they're offering you zero percent.
You know, I'm not a big fan of these in the future. I wouldn't do that just simply because you know the reason they're willing to do that is so often we might have the best intentions to pay it off but we don't. I'd rather you save up and just go ahead and buy it with cash and not open another account. In terms of the impact on your credit, there's not really any impact there. Not activating the card will have very little, if any, impact on your credit score. The account is considered open from the moment you're approved. Also, you might still be charged an annual fee if one applies even if the card remains unactivated.
So you need to check on that. Your score was affected both positively and negatively by accepting this loan. It would typically go down a little bit because you took on new credit plus you have that credit check that went into getting you approved for this. But obviously having an account where you're an on-time payer is going to add to your positive credit history. So I would just say let's just get it paid it off as soon as you can, certainly within the 18 months, and I would just let that card be. In fact, you may want to call them and tell them you have no use for it, you're not going to activate it, and they can note the account accordingly.
Their marketing department by now knows that if they mail out a thousand of those cards, more than a couple of people will bite, and that's what they're hoping for. TJ, glad you called today. Thank you very much. Chicago, Illinois. Hello, Nick. You're wondering about not fixing up a home but maybe buying a home, huh? Yes.
Me and my wife wanted to buy a house this year, but considering the current market, and because of COVID, and I've heard about people forbearing, and people not delaying payment, paying their mortgages, and I was just wondering if, and because the prices in the area have gone up, and so I was wondering because of the, you know, the demand and the supply is very low, I was wondering if I should wait. Yes. Nick, do you currently own a home or are you renting? I own a home, we own a home. Okay, so you'd be selling your current home and potentially looking to buy maybe something a little bit larger, is that right?
Yes. Okay, what is the value of your current residence, roughly? 340. Okay, and what do you owe on it?
164. Okay, and what would you be looking to spend if you were to sell this home and buy something else? About 500,000. Okay, all right, and you'd put a hundred percent of the proceeds into this new property, do you have anything to add to it? Yes, we do have a hundred thousand states. Okay, and you would, would you go ahead and add that to the proceeds that you'd pull out of your current residence?
Correct. Okay, so obviously you'd be going in with with quite a bit of money, I mean you've got nearly 200,000 in excess of your current residence, you've got nearly 200,000 in equity right now, assuming 340 is a good price, a good market value. If you add a hundred to it, you'd have almost 300,000 going in. I would imagine perhaps you could do a little bit better on the interest rate, you just want to make sure you look at your budget, make sure you can support it. You know, in terms of whether or not this is the right time, there's really not a bad time as long as you are exiting from a current home in the market and entering a new one, meaning, you know, if you are paying top dollar, you should get top dollar for the one that you're selling, so you should maximize the value on the sale of your existing property even though you'll be, you know, paying at the arguably the top of the market for this next purchase. I like the idea that you've saved and so you're going to put an additional significant sum of money to make this jump, which tells me that you're, you know, prepared for it financially.
So I don't have any problem with that, I think now's as good a time as ever for you to go ahead and make a move like this, assuming you've really thought and prayed through whether this is, you know, needed in terms of this increase in the home and, you know, you recognize there'll be a slight increase in the mortgage payment each month, but apart from that, the market conditions don't give me any concern because you're already in the market and you've got a property to sell. Nick, we're going to leave you there, but we're glad that you called today and we trust that'll work well for you as you and your wife ponder this, but rates have seldom been lower, so, you know, this is something you want to think through for sure. This is MoneyWise Live, he's Rob West, I'm Steve Moore. What we know for sure is that we have some open lines and we'd love to chat with you.
800-525-7000, 800-525-7000. More MoneyWise Live after this. Welcome back to MoneyWise Live, finding God's plan for your financial life. Let's go right back to our phone lines.
Miami, Florida, Marcia, what's on your mind today? Yes, thank you. I was wondering, for day trading stock market, is that gambling? You know, Marcia, I would say that it is very close to gambling unless you are a professional trader. You do this as your trade, as your profession, and you have specialized training.
Oftentimes you'd be doing it for an institution or you are doing it for yourself, but again, you have very specialized training. I think for the vast majority of people that are trying to day trade the market, when we first accept the notion that we're God's money managers, therefore he owns it, we're the trustee, the steward of God's money, then we have to say, what would the owner have me to do with his money? And when we look to the Council of Scripture, which as a trustee, you'd look to the trust agreement, which in our case is the Bible, I don't think we really see any support for this type of investing where we're kind of jumping in and jumping out, trying to make a quick dollar when that brings pretty significant risk along with it. In fact, Proverbs 21, 5 speaks directly to this. The plans of the diligent lead to profit, as surely as haste leads to poverty.
And I would say this is not a steady plotting type of investment strategy by any means. So that's why I think when we're taking God's money and we recognize our role as steward, it elevates our responsibility. We say, then how should I manage effectively as a faithful steward God's money? I think we have to take the long view for the vast majority of us looking to seek a return on God's money. And I think the risk associated with speculative investing and day trading would put it more akin to gambling and does begin to get into an area where we may be violating biblical principles. So, again, it's not a black and white.
There certainly would be a case in some instances for that type of investing. But for the vast majority of people listening to this program right now, I would say we ought to just stay away. Hmm. Marcia, thank you. Or rather, Marcia, thank you very much. We appreciate that. Rob, if you consider yourself a student or a professional when it comes to something like day trading, do you have any problem with someone at least researching it?
No. Again, if this is something you're going to commit the time to and specialized training, you know, oftentimes it becomes more technical than it does emotional. I think for most folks, they're reacting emotionally to a headline that they're seeing or feeling like they're missing out on something. That's not the type of investing that I think would be prudent.
But when you're specially trained to do something like this or you're doing it as a profession on behalf of a much larger financial institution, I think that does put it into another category. Well said. Out to Aurora, Illinois. Hello, Jim. What's your question for Rob?
Hi, gentlemen. I'll try to keep this concise, but it is kind of detailed. My father passed away, left us some money, my wife and I. He has kind of a passing wish for us was to buy a home and not rent the situation we're in right now.
We are renting the HOA is running the rental, but the bank owns it because it went into foreclosure. They're not giving us an opportunity at this time to buy a five year goal or before is to move out west. We're wondering, should we stay here and kind of bank on the opportunity that we may be able to buy the home at a foreclosed price with the bank when they divulge that information to us? Or should we just kind of take it month to month and get out west? It's a nice home. Property value is increasing in this area. So we just wonder, should we stay and hopefully buy or should we just kind of pack it up and make a change now? Yeah, yeah.
Well, Jim, it's a great question. And obviously, there's the financial side of this. But then there's the non-financial side, which with a home is where I would start. You know, I typically don't look at a home as an investment. Now, you might say, wait a minute, it should increase in value over time, right?
Yes, it should. And that's great. But the definition of an investment is you would sell it when it accomplishes its purpose. Meaning if you had a nice kind of move up in the housing market, you might get out of it and sell it. Well, that's not how we look at our homes, because, well, they're our homes.
It's where we live, right? And so I think we've got to start from that perspective. So I would start with where is God calling you? And if God is leading you out west, for whatever reason, work or ministry or whatever it is, lifestyle, I would put that first before I would consider with your home, not with an investment, but with your home, before I would consider whether it's an opportune time or whether something may come down the road with regard to being able to buy it at an advantageous price.
But if God decides to keep you there, well then maybe you take it month to month and see how it plays out. Jim, thank you. We wish you the best with that. When we return, we'll talk with Kathy, Gary, and Judy. Don't go away. Well, I'd like to be able to speak clearly.
Let's try this again. If you'd like to find out more about who we are and why we often don't sync up our tongues with the rest of our bodies, you can find out that and much, much more relevant stuff when you visit MoneyWiseLive.org. That's our website. Lots of great information there to help you with your budgeting and the way you manage your money, and not only hundreds of biblical principles, but just real practical day-to-day things to help you find a Certified Kingdom Advisor or to find a budget coach to help you out. That and much, much more when you visit MoneyWiseLive.org. Gary, we're coming to you, my friend, but first it's Kathy in Fort Lauderdale, and what's on your mind, Kathy?
Hi, thanks for all you guys do. I was just wondering what website to go to to freeze the credit report account? Yeah, Kathy, so when you talk about freezing credit, you're talking about placing a PIN number on each of the credit bureaus that is required anytime somebody wants to pull your credit for the purpose of extending you credit or giving you a new loan, and you would do that directly with the bureaus, Kathy, so you're going to want to go directly to TransUnion, Equifax, and Experian, and when you get there, they'll each have a slightly different process.
You should be able to handle it electronically, though. You'll just want to look for the option to freeze your credit. By law, all three of those major bureaus will have to offer this to you at no cost, so there shouldn't be any expense to that, and it will be for a period of time, which will at some point turn off, so you'll have to reinitiate it, but I would just go directly to each of the bureaus and tell them that you want to freeze your credit, and they'll walk you through the process. You can go to a single website if you're just looking to pull your credit. To see your credit file, I would just go to annualcreditreport.com, but to freeze it, you've got to go directly to each bureau.
So those sites again, Kathy, TransUnion, Equifax, or Experian, they'll pop right up easy to find. Does that help you? Is there anything else? 100 percent. Thank you so much. I really appreciate it.
Absolutely. Bye-bye. Cleveland, Ohio. Hello, Gary. What's your question today?
Hello. I received a check from the government, and I don't understand what it's for. There's no explanation given other than at the bottom it says SOC, SEC, Social Security, I guess, for INS, and they sent me this, and I just tried to call different locations, you know, what is this all about, and no one seems to know. Yeah. What is the amount of the check, Gary, if you don't mind me asking?
$428. Huh. Yeah, that's interesting. Are you making Medicare payments by any chance? Yes.
Okay. It could be a refund of an overpayment. That would be the most likely scenario. So you're right. SOC, SEC does, in fact, stand for Social Security payment for insurance. So, you know, oftentimes, you know, folks will get a check for $255. If you have a family member that passes away, that's a standard burial benefit. In other cases, you may see that when you receive a stimulus payment because you're enrolled in claiming benefits in Social Security, and so they may get your information from that repository. But in this case, it's likely a refund of overpayment on the Medicare payments.
But if you want to kind of chase it down to the end, I would do a little bit more due diligence by calling the Social Security office, check for the number for your local office, set up a virtual meeting, and you can get to the bottom of it. But I'm going to guess, and that's all it is, that's what you're looking at. Well, Rob, how do you know these things?
I have no idea what the answer was to this question. We have a great team. I'll just leave it at that. Gary, God bless you, brother. We appreciate it.
Let's go up to Tennessee. Hello, Faith. Welcome to the program.
And what's on your mind? Well, hi, and thank you for being there. I appreciate, I appreciate, you know, every time I listen, I learn something. Well, thank you. Yes, thank you very much. Go right ahead.
Well, thank you. Okay, what it is, is I have $75,000. I don't have any investments.
So, you know, I was wondering about the market, climate. I don't know, I can't afford to lose this money. I don't know whether I should invest in stocks, bonds, etc. I'm not sure what to do with the money. I'm a novice. And, you know, I have some savings accounts, but, you know, this is pretty much all I have. I'm a widow on a fixed income.
And I'm 63. So, okay. I was just wondering what you thought about, I want to be a good steward of God's money, of course. And that's my concern here is doing that.
Yes. Well, I certainly appreciate that, Faith. And I understand, you know, what you're describing here, because you want to be found faithful.
You don't want to lose the money because you want to be a good steward and you want it to be there down the road if you really need it. Let me ask, are you able to live within the provision that you have coming in, the fixed income? Yes, I am. You know, I probably cannot do everything I'd like to do. But, yes, I can live in it. Now, I do have a few minor projects that I needed to do in my kitchen, the countertop and a sink and some carpeting upstairs.
Yeah. So let's kind of get some numbers going here. So you said you have $75,000, but then you have some savings accounts in addition to that. What do you have other than the $75,000 in liquid funds? Well, you know, really they're part of my budget. I just have money moved from my checking to savings twice a month. And it's really for things like Christmas and taxes and insurance.
You know, let's see what's another auto expenses. You know, I have five of them or so. Okay. Let me ask you this. Do you have any funds apart from the $75,000 that don't have a specific purpose in the next 12 months?
It's so low. I mean, I have one that I might take money out of from time to time. Okay.
All right. So what I'm getting at there is, you know, at your age living on a fixed income, I'd really like for you to have a good six months worth of expenses and reserves that's not in the stock market, that's liquid, that's readily available. And that we would call your emergency reserves. See, I don't count the savings for various purposes that you know what they are. You know, your, you know, quarterly insurance payments come and you know, you're going to have a Christmas every year. I mean, there's some things you're saving for and that's a good thing.
You should do that. But that's really not a part of your emergency fund because it has a stated purpose that will come within the next 12 months. And so if we were to say, let's take of the $75,000 six months at a minimum, unless you felt like you wanted more and the goal here is peace of mind, right? What would be six months worth of expenses, do you think roughly? How much?
Well, it's $18,000 because... Okay. Go ahead.
I kind of figured that out. Okay. Okay. And what do you need to spend on these renovations and repairs?
Well, it's going to be $2,000 to $3,000 on the cabinets and the sink. Let's do this. I'm going to ask you to hold. We got to hit a break. When we come back, we're going to finish this. I'll give you my thoughts.
Okay. Stay on the line. And we'll be right back after this. Hey, we're talking with Faith in Tennessee. She wants to be a good steward, a good manager of the money God's given her at the same time as she doesn't have a whole lot of money. And there are some repairs that need to be done in the house. And Rob, I'll turn it over to you, sir.
Very good. So Faith, at 63 years old, living on a fixed income, living within your means and saving for your non-recurring expenses, which is really important. The most important things that come up every year, just not every month. And you typically don't get a bill for them in every case.
You know, that's all good. And in addition to that, you have $75,000. So if we were to take six months worth of expenses and put it into an emergency savings account, separate from those specific savings accounts, you told me that would be $18,000. Let's round that up to $20,000. And then we talked about some minor home repairs.
We talked about some minor home repairs you want to do, putting new carpet upstairs and some cabinets. We're guessing that's going to be about $5,000 or so. So basically, you'd have about $50,000 to invest. The key is you'd want to be fairly conservative with this, right? You'd want a growth component to it, maybe as much as 30 to 50% of it in stocks. And the rest you'd probably want in some bond type investments, so that together, the portfolio would not have as much volatility as the overall broad stock market, but would do better than you could do in a high yield savings account yielding a half a percent. And where I would go for that, if you're comfortable and computer savvy, and you're comfortable doing business on the internet, probably one of the robo advisors would work for you. So either Betterment or the Schwab Intelligent Portfolios, Fidelity even has one of these. Where they're very low cost, you'd answer a series of questions about your age, your stage, your life stage, what your objectives are, how much risk you want to take.
And they're very plain English type questions that you're responding to. And they're gathering all that information. And then they would put together a portfolio through a computer algorithm that is, again, is very low cost, and would probably be at least half in bond type index ETFs, and the other half in broad market stock indexes, probably maybe even a little less than half in the stocks. And then you'd move the money in there.
And then you could watch it as much as often as you want, you'd certainly get a statement regularly. And it's a very low cost, very hands off approach to investing. Now, you'd have to recognize that there's a good portion of it that's at the risk of the stock market. So if the market was down 30%, like it was last March, you're probably be down 10 to 15%. So you'd have to be okay that you could open a statement one day and your 50,000 is 45. And that's just a part of investing. But if you take the long view, recognizing, okay, I shouldn't need this money in the next five years, because I've got my income, and I've got my emergency savings, and I'm saving for those things that come over the next year, then you could let it grow. And it should do better than you could do in a CD or a savings account. The other approach would be to visit with our friends at soundmindinvesting.org, and let them take a little bit more hands on type approach to the same type of investment strategy.
So I would go one of those two directions, either a robo advisor at Fidelity, Schwab, or Betterment, or go to soundmindinvesting.org, and I think you should be looking at investing between 40,000 and 50,000 of the 75. And Faith, we do appreciate your call today. Thank you very, very much. Out to, let's see, Libby, Montana. Hello, Ted.
How can we help? Hey, thanks for taking my call. My question is, I have a rental property that I bought about 10 years ago for $10,000. It's probably worth about 130 at this point. I don't have a mortgage on it. I have a mortgage on my own home. Should I sell my rental property in the current market and pay off the mortgage on my current home?
I do have other rental properties. It would just be a small percentage of my monthly income that I'd give up, but I would gain 500 a month by doing so. Yeah, well, I think it comes down, Ted, to how strong a conviction do you have to be debt-free? I think the Bible certainly affirms this idea that we should be moving toward, if not over time, completely debt-free. It gives us a lot of flexibility, a lot of peace of mind. Frankly, it gives us the ability to respond, I think, more effectively to the prompting of the Holy Spirit when it comes to giving.
Being unencumbered is a wonderful thing. We've got to put that against the financial side, which is, you're giving up an income stream because you have an income-producing asset. Are you looking to reduce the amount of time and energy you're having to put into maintaining that? Would you prefer to have a more passive type investment strategy or just use it for debt reduction?
I think we have to weigh these two things. Where I would start is to say, and if you're married, you and your wife pray through this together, how strong a conviction do we have that we want to be debt-free right now? If you have that conviction, which I would certainly affirm, regardless of the financial side, if that's where you come down, then I'd say, yeah, use this as an opportunity to say thank you, Lord, for the increase in the value of this property. I'm going to take the proceeds, I'm going to pay off that first mortgage, I'm going to get out of debt, and I still have a couple of more properties that are working for me. But if you said, no, we're handling this debt on our primary home just fine, and we're paying it down, in fact, we may even take some of the proceeds of this rental property and accelerate the payoff, but we like the idea of this asset being something that we continue to own because it is producing an income, and I kind of like working on these properties and maintaining them, and it's kind of a side business for me.
You know, I think we've got to look at both sides of this, but tell me your thoughts. Yeah, no, we definitely have the goal to pay everything off. We definitely want to be good stewards of what God's given us, and it's only by his grace that we're in the situation we are in now, so we just think, you know, maybe the sooner the better, but I know the market may not stay this way, and it's just the opportunity to get us there a little sooner.
I just, you know, was curious. We've been praying about it, and we're seeking other people's opinions on what's new in the situation. Well, given that added insight there on your desire to be debt-free, I'd say absolutely. Now, could the housing market continue to go up? For sure. Could this be the top?
It could be, but I wouldn't use that as the basis for my decision. I would say what we know for sure is there's been a significant appreciation in this property. We know you guys want to be debt-free.
You've got other investment properties. Let's take this money. Let's pay it off. Let's be thrilled that you own your home now free and clear and allowed the Lord to move in other areas of your life, so I'm affirming this idea. Ted, we're glad that you got through today.
Thank you very much for that. Quickly, we move to Orlando, and Deborah, what's your situation? Hi there.
First of all, thank you very much for all you and your team do. I'm retired. I'm retired.
I'm in my 70s. My home is totally paid for. I have never been married. I don't have children, so I'm looking at what to do with my resources after I'm not here, and I have no need for my home once I'm not here, and I was considering donating it to my church, which is nearby, thinking they could use it either for missionaries that are coming through or for families that need a place to stay or whatever, but I also don't want it to be a financial handicap for the church, so that's my question. If I donate a house that's completely paid for, what's the best way to think about that? Yeah, and Deborah, just to make sure I understand, you're looking at making this donation at death as a part of your estate, is that right? Yes, yes. Okay, all right.
Yeah, no, there wouldn't be any negative financial impact for the church whatsoever. I think the key is just to make sure that that's set up in advance and done properly. Do you have a will? Do you have a relationship with an estate planning attorney? Have you thought through kind of how you're handling your estate on all fronts?
I do, but I need to update it, and that's why. Yeah, so this would be a good time to make sure that everything is up to date, and at that time I would express your desire to give this gift to the church. I mean, basically, what would happen, it'll be a huge blessing because they'll receive the home, and then they'll be able to turn around and sell it, and the proceeds will then, you know, be available to them to use for ministry purposes. So I love this idea. You're just going to want to make sure that all that is put in place properly as you do your estate planning.
So don't see any downside whatsoever, and I think since you want to update everything anyway, now is a good time to get this done. Deborah, we hope that helps you. Thank you very much. You sound like a very, very generous person, and I'm sure your local church will be blessed when that time comes.
Thank you very much. And Rob, you know, none of us really like to spend a lot of time pondering when that time comes, but it's going to come for all of us unless the Lord comes first, so better we think about it earlier rather than later, and so that you have time to pray about it, think about it, look at all your options, and these days there are far more options than there used to be from a financial planning standpoint, right? Well, and frankly, Steve, I think it's a real stewardship opportunity. You know, I love the question Ron Blue, the author, one of my mentors, has always challenged his listeners and readers to ask, and that is, is the next steward chosen and prepared? Because we realize everything we have belongs to God, it doesn't belong to us, so we need to choose the next steward. We don't want somebody to choose that steward for us. We want to make that choice, whether that's—and there's only three places, either the government and taxes, charity or ministry, or our heirs, right? Those are the only three places that we could go, so we want to intentionally choose that next steward, and we want to make sure they're prepared, and that's most often in the case of kids that are receiving large amounts of money, but our stewardship responsibility extends through that final decision at death. Yeah, what's that wonderful line that Ron Blue mentions in his book, Splitting Heirs, about if you love all of your children, you'll treat them one way or the other. He says if you love your children equally, you will treat them uniquely, which a lot of people have a problem with because they think that's just not fair, but his idea is that, you know, we realize our kids are different.
They have different needs, different stages in life, and because of that, we might want to treat them uniquely, even though we love them equally. Amen, love it. Rob, thanks very much. You've been listening to MoneyWise Live. This radio program is a partnership between Moody Radio and MoneyWise Media, and of course, you are a huge part of that three-legged stool as well. Thank you so much for your prayers and your generous donations that allow us to come to you each day. If you'd like to know more about making a gift or a donation through us, it's MoneyWiseLive.org. Click the donate tab at the top of the page. My thanks to Deb, Amy, Gabby T., and Jim for their technical service today. Join us again tomorrow.
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