Is this a stupid idea?

8 Replies

The big question: Should I rent my primary residence, or should I sell it after a few years and use the money to then purchase investment properties?

Here is my situation: Just built my primary residence (3bed, 2bath) in 2016 in Noblesville, Indiana. The area is growing rapidly, I would consider it a B+ neighborhood with around 7-8% appreciation annually the past few years. I owe 151k on the loan, and the home is valued at 162k. This is the only property I own.  Its also important to know that I just had a bankruptcy discharge in December 2017 which is going to make it more difficult for me to get financing moving forward. Im not sure what the best strategy is and I am very open to all suggestions. 

Thought is to rent out the current property but I would only cash flow about $85/month. I could potentially get a HELOC 2-3 years from now and use that to purchase the next property but thats if I could get approved.

I appreciate any suggestions or opinions here. 

@Jordan Shay , you haven't mentioned: where would you live? ie. Why even move? There's obviously a lot more to your story. eg. Who lent you basically 100% of its value (while Bankrupt!)?

ie. Zero down is often trouble just waiting to happen. If I was a Lender, I'd balk.

If it's through VA - thank you for your service. All the best.

I foresee a lengthy learning curve still ahead for you. [Look up: patience]...

Originally posted by @Brent Coombs :

@Jordan Shay , you haven't mentioned: where would you live? ie. Why even move? There's obviously a lot more to your story. eg. Who lent you basically 100% of its value (while Bankrupt!)?

ie. Zero down is often trouble just waiting to happen. If I was a Lender, I'd balk.

If it's through VA - thank you for your service. All the best.

I foresee a lengthy learning curve still ahead for you. [Look up: patience]...

 ...and, while you are in the dictionary, look up the word "Rationalization".

I do have a question, how did you calculate your COC Return?...and where did that "annualized ROR come from? (Have you found the definition of rationalization yet")?

To answer your initial question, I wouldn't call this a "stupid idea", but it isn't one I would do, or would have done,...ever....at least not on purpose.

Originally posted by @Joe Villeneuve :
Originally posted by @Brent Coombs:

@Jordan Shay , you haven't mentioned: where would you live? ie. Why even move? There's obviously a lot more to your story. eg. Who lent you basically 100% of its value (while Bankrupt!)?

ie. Zero down is often trouble just waiting to happen. If I was a Lender, I'd balk.

If it's through VA - thank you for your service. All the best.

I foresee a lengthy learning curve still ahead for you. [Look up: patience]...

 ...and, while you are in the dictionary, look up the word "Rationalization".

I do have a question, how did you calculate your COC Return?...and where did that "annualized ROR come from? (Have you found the definition of rationalization yet")?

To answer your initial question, I wouldn't call this a "stupid idea", but it isn't one I would do, or would have done,...ever....at least not on purpose.

 I don't think that Jordan is looking for your sarcasm here. 

Originally posted by @Lana Lee :
Originally posted by @Joe Villeneuve:
Originally posted by @Brent Coombs:

@Jordan Shay , you haven't mentioned: where would you live? ie. Why even move? There's obviously a lot more to your story. eg. Who lent you basically 100% of its value (while Bankrupt!)?

ie. Zero down is often trouble just waiting to happen. If I was a Lender, I'd balk.

If it's through VA - thank you for your service. All the best.

I foresee a lengthy learning curve still ahead for you. [Look up: patience]...

 ...and, while you are in the dictionary, look up the word "Rationalization".

I do have a question, how did you calculate your COC Return?...and where did that "annualized ROR come from? (Have you found the definition of rationalization yet")?

To answer your initial question, I wouldn't call this a "stupid idea", but it isn't one I would do, or would have done,...ever....at least not on purpose.

 I don't think that Jordan is looking for your sarcasm here. 

 If I offended you, I'm sorry.  However, if you actually read what I said, and what Brent said, everything we said was giving him his answers...and then some.  There are many ways to communicate.  If a little sarcasm, that contains helpful statements, where the sarcasm is in fact a tool of that communication to make a point, "me thinks there are bigger problems afoot".

Oh, and one more thing.  Congratulations!!!  That was a great game yesterday.

Originally posted by @Joe Villeneuve :
Originally posted by @Lana Lee:
Originally posted by @Joe Villeneuve:
Originally posted by @Brent Coombs:

@Jordan Shay , you haven't mentioned: where would you live? ie. Why even move? There's obviously a lot more to your story. eg. Who lent you basically 100% of its value (while Bankrupt!)?

ie. Zero down is often trouble just waiting to happen. If I was a Lender, I'd balk.

If it's through VA - thank you for your service. All the best.

I foresee a lengthy learning curve still ahead for you. [Look up: patience]...

 ...and, while you are in the dictionary, look up the word "Rationalization".

I do have a question, how did you calculate your COC Return?...and where did that "annualized ROR come from? (Have you found the definition of rationalization yet")?

To answer your initial question, I wouldn't call this a "stupid idea", but it isn't one I would do, or would have done,...ever....at least not on purpose.

 I don't think that Jordan is looking for your sarcasm here. 

 If I offended you, I'm sorry.  However, if you actually read what I said, and what Brent said, everything we said was giving him his answers...and then some.  There are many ways to communicate.  If a little sarcasm, that contains helpful statements, where the sarcasm is in fact a tool of that communication to make a point, "me thinks there are bigger problems afoot".

Oh, and one more thing.  Congratulations!!!  That was a great game yesterday.

 Oh no. You didn't offend me. I have seen your comments before and have noticed that this is your style of writing, but those new here, some in difficult situations, looking for advice might not understand your tone of communication. 

BTW. Our whole City was illuminated  with fireworks last night, brighter then on New Year's Eve. I am so happy ! Glad you enjoyed the game.

The numbers don't make sense and don't tell the whole story. ROI/COCR seem incorrect at the very least.

But I think a helpful response is, what is your goal? Do you want a cash flowing property to put more money down for the next, and in some specific timeframe? If so, if you could take say, 20k cash and 5-10k of your proceeds, and put it towards a property that has very positive cashflow, perhaps that is a good reason to sell. But the cash flow is low, I don't know if you've captured expenses like maintenance, vacancy, PM, CAPEX, etc., to accurately paint the picture.

My evaluation would be ultra conservative, and if the numbers still look good ultra conservative, then you either are missing something or its truly great deal.

@Jordan Shay ,

If you sold it, you'll pay be lucky to break even, don't forget commissions/taxes/fees.    If you rent it, where are personally moving to,  since the bankruptcy will make it really hard to  get someone to rent or sell to you.   Your best option IMO is to stay put! 

I agree with above that you have no equity to sell, and, unless you have a very generous relative that you can live with for a few years while you are waiting to age out of the bankruptcy, you need somewhere to live, so moving to rent another place and renting the place out may not make much sense either.

Depending on your life/family situation, have you thought about "house hacking" by getting a roommate (or roommates) to help pay down your mortgage?  That's one way of using OPM to pay down your debt and or build up cash for the next purchase in a few years.

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