Advice on Current Primary Residence

[Jake Rombach]

Hi BiggerPockets community!

I wanted to get some advice on what I should do in my current situation. We are planning on moving out of state soon, and we would like to keep our house as a rental and start building a rental portfolio. Bought for 407k current Value is about $520, still owe 330k on it with an interest rate of 2.75. We dont have quite enough for a down payment on a new home yet unless we clear our reserves. 

What option do you think is best for us. 

1. Sell and start the portfolio in the new market. 

2. Keep as rental and see what we can afford in the new market perhaps a live in flip. 

Open to any options that the community has too, ideally want to keep it as a rental. 

Mortgage: $2100 - Rental estimate $2500-$2800

Thank you all!

[Dave Foster]

@Jake Rombach this is a pretty common position investors face. It will mostly come down to your local market and whether the numbers make sense. Fortunately, you're not in a position where you need to act in urgency.

If you have lived in the property for two out of the previous five years, you could take the first $250k ($500k if married) of the gain tax-free if you decide to sell the property. Even if you did decide to rent out the property and see how it performs, you would still have exactly three years to take advantage of the exclusion if you did still want to sell within those three years of renting it out.

Otherwise, if there is any additional tax left over, you could always do a 1031 exchange and reinvest the tax into another investment property in the state you're moving to. Or if the property performs well and you no longer qualify for the exclusion, you could always do a 1031 in the future if you ever decide to sell it and reinvest into any type of investment property in any state. Still deferring all tax and depreciation recapture.