This is my first forum post on Bigger Pockets. I'm brand new to real estate investing. My wife and I currently have a Townhouse with close to $40k in equity. We would like to purchase a single family home for more room and privacy. I'm wondering if I should sell or keep for my first rental property?
Hey Raheem for people to help you, you need to post relevant info. In this case, you need to provide some visibility into the current Townhouse financials including the current cash-flow if keeping / renting, as well as the overall financing picture - asset value, and amount owed...
Next, you will need to think about and provide info commenting on your local market with regards to other options to possibly utilize that equity elsewhere.
Decisions are best made based while considering opportunity costs and to do that effectively you need to be prepared and generate options.
I appreciate the heads up, I'm brand new here. Thank you.
@Raheem Mills welcome to BP! Man, that's a great question that many people have encountered, as did my wife and me. Certainly a lot of considerations. A couple come to mind quickly.
First, can you afford to get into your next home and not use the money tied up in your duplex? You might have some financial housekeeping to do to be in that position, but it's not impossible.
Second, is your condo in marketable condition, does it have desirable specs, and is it in a desirable neighborhood? The kind of questions you'd be asking yourself if you were buying that condo to rent out. A reputable realtor should be able to help with these questions.
And third, are you prepared to be a landlord? There's a lot involved, but it's definitely doable. We found it extremely helpful to connect with someone locally (friend, neighbor, relative, co-worker, etc) who's gone down that path and learn from their experience.
My wife and I sold our first house years ago because we didn't think we were ready to be landlords. I've regretted it from day one, because it's definitely the kind of home I look for now as an investor.
Anyway, just some things to consider. Best of luck to you!
@Rich Senyszyn I appreciate your candor and feedback. Thank you. Yea I get the feeling I might regret if I did sell. To answer @Chris Jensen question, it is in a desirable location that is continuing to grow. We could possibly swing getting into something else without using the money tied up into it provided the down payment was no more than 20k. We are in the middle of upgrading it now new floors, paint, kitchen appliances, and bath. Thank you again.
I'm sure you did this but in case you haven't. Make sure the people who own the building your town home is in will allow you to rent it out. A realtor I'm working with pulled me out of a deal when he found out that the fine print stated I couldn't rent out.
@Mark Danforth Appreciate the heads up Mark, we're allowed to rent them out, there's just rules surrounding how we advertise. No For Rent signs in the window etc. Thanks.