Beginner investment property questions..total newbie!

[Catherine Hensley]

My husband and I are being given a lump sum of money from the passing of a family member. We are thinking of buying a small condo in the Destin, FL or Gulf Shores, AL area... we prefer Destin. This would not be a posh, large condo but hopefully sleep roughly 4 to 5 people. 

We own a home in Missouri and have children. We are in our mid forties. We are considering paying off our Missouri home... or buying a condo to use as a family and rent out the majority of the year. My very simple question is... what is a better use of the money? Buying an investment property or paying off our new house to owe nothing? 

I know there is no "right" answer and this involves a lot of variables. We are still young enough to somewhat manage a property from a distance. Husband works full time I work part time currently. Can someone point me to material to read so we would have an idea what we'd be getting into... pros and cons? Any help is appreciated. Thank you! 

[Jennifer Wilson]

Hi @Catherine Hensley,

I'm sorry to hear about the passing of your family member.  A similar situation happened to myself and my husband which is how we got our first rental property almost 5 years ago.  However, it also opened our eyes to the massive potential that real estate investing can provide.  Because of that, I agree with Matt and Sandy in that I'd recommend looking into a property that provides you with additional income vs. paying off your mortgage (unless you feel as though the value of your home is lower than what you owe).

Where my husband and I differ from a lot of other investors in the Destin market, is that we invest in long term rentals vs. short term rentals.  We do see the value in short term and know that you can make good money in it, but we don't feel that it is as stable as long term rentals.  Our current situation with COVID19 is a perfect example.  Short term rentals have been shut down for the last month during what would normally be a prime season and this situation was completely unforeseeable a couple month ago...  As a follow up, if you do think that a long term rental would be a good route for you, I'd recommend starting with a small home near you or in a location where you have someone you can trust to check on it/maintain it.  It'll make it less stressful than trying to handle something from hundreds of miles away.

You mentioned that you'd like some reading material. If you haven't read them yet, I would recommend "Rich Dad, Poor Dad" and "Cash Flow Quadrant", both by Robert Kiyosaki.  Cash Flow Quadrant might be a little more relevant as it shows the difference in how to earn money and how it affects your lifestyle, but it piggy backs off of Rich Dad, Poor Dad, so I'd recommend both!  Otherwise, I'm sure there are a lot of blogs and other questions on this site that would give you a faster answer with other people's experiences.

I wish you all the best and good luck!