Investment Allocation Question

[Thor Camargo]

So I have 3 rental properties in central Illinois. 1 has a mortgage on it. I'm selling one of those 3 tomorrow and can just use the proceeds to pay off the mortgage on the third and pay off the mortgage - leaving me with 2 houses with no debt and about $200k in equity.

Here's where my options get weird.

I'm moving to Colorado (where real estate prices are hefty - The place I'm likely to get will be coincidentally around $200k.) I also have the ability to get a VA loan for a low APR for NO money down (if I wanted to - although I would have about $50k to put as a down payment.)

Would you:

A - Sell the 2 rentals and buy a place in cash in Colorado and build back equity with the savings on not having a mortgage payment?

B - Take the loan on the place in Colorado and keep the 2 places - likely using a property management company to run them.

C - Other - Please explain.

Thanks for any feedback in advance!

[Michael Seeker]

I would personally keep the rental properties (assuming they were decent buys in the first place) and take the 0% down loan with 30 year mortgage at around 3-4% interest.  Keep the $50K in the bank for reserves.

What you should do really depends on whether you want to be a landlord/rental owner long term.  If you initially made the properties work by doing the management yourself and you don't really see a significant benefit to owning them, then things will not get better from halfway across the country having to rely on a PM to oversee things for you.

If you have to ask, then the answer is probably sell the rentals.  I personally wouldn't want to buy something with all cash right now when you can lock in a 3-4% interest rate for 30 years.