Selling 2+ acre lot to pay off primary residence faster {worthwhile? Y/N?}

4 Replies

Hello BP,

In the spirit of Robert Kiyosaki's definition of an asset being something you own that generates you money, I've been thinking about making a move which would entail selling my 2+ acre lot in a beautiful hill country gated community ( dancingbearliving <dot> com ) and taking the proceeds from that to pay down my primary residence much faster (I own the land outright, fully paid for, have deed, title, etc...)

I define the land as a liability because it's not generating income for me; rather it is costing me in annual taxes.  So by this definition I feel my home can become an income producing asset for my family must faster if I were to pay down the mortgage that much faster and get renters into it.  Rental market is still HOT in San Antonio, TX.

In the long run, I am building my asset portfolio and if you compare my current primary residence to my lot it's easy to conclude that the true asset here is the home due to the following factors: 

  • Real Estate (in this case, my primary residence) appreciates in value, increasing my net worth
  • I can have renters in my primary residence, which would generate income thus turning my investment into an income producing asset (something I can't do with my land)

So I'm looking for some feedback from all my peers here @ BP.  Is this a good strategy?

Appreciate any feedback, PM me with any questions if you don't feel comfortable posting on this feed.

Thank you,

Alonzo Garza from San Antonio, TX

Hi @Alonzo Garza

Why not make that parcel a "cash flowing asset"? 

It's paid for. It must have some great attribute or you would not be hanging on to it. It's something you would not mind having back if a buyer doesn't pay it off.

I'm talking about "you" - advertising and selling it on the internet - and offering your own financing. Say, if you would accept $15,000 for it, so you sell at $499 down and $199/mo with 6% interest, you could make that cash flowing for over 7 years. Dream it up! I have a number of these and my buyers love it because it is hard to get financing on an unimproved parcel and they want to start building their dream cabin (or whatever) today!

Monthly Payment $ 198.74
Interest Rate 6.00%
Term (months) 91.0 7.6 years
Down Payment 499.00
Sale Price 15,000
Financing 14,501 

It stays in your name until it is paid off. And buyer is responsible for annual property taxes. Sure, there are documents involved to make it all legal but it is not hard and a great way to build up a side passive income stream! (What if you have 10 of these so you have an extra $2k/month?)

Just a thought. 

Hope this helps!


If you don't have plans to build on it and move there someday, sell it!  (unless you think it is a great investment that is appreciating... doesn't seem like you do...)

As far as putting the proceeds into your house and making it a rental, that's cool.  Where will you family live then?

I get the Kiyosaki idea, but not all assets produce income - some may simply appreciate, depreciate, or hold value.

Sell the land and buy another or multiple properties that you can lease out.  Why pay down your mortgage quicker?  Can you not make more interest on the money you invest? 

e.g. - I recently purchased a new F350 which I could have paid cash for but instead opted to go with financing at 2%.  This is being paid by a recent rental I acquired in which I am all in at $55K cash (approx. price of truck).  Rent is about $1100.  At the end of the day the tenants will be paying for my new truck because I chose to put my money in an income producing asset.  If I would have paid cash for the vehicle I would have nothing but a depreciating asset on my hands.  My 2 cents.

I agree with Rocky. Your mortgage is probably at a low rate meaning its cheap debt. It might be better to use that money to purchase another property, something that will give you a higher rate than your mortgage loan.

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