Built my forever home - now I might need to move!

San Francisco, California
Buying & Selling Real Estate
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Built my forever home - now I might need to move!

Account Closed
San Jose, CA · Member since 2019 · 64 posts · 26 votes

Hi everyone,

I spent 2.5 years building what we thought was our forever home in the Bay Area. We did things that would not make sense if I were building it as an investment property. Due to some life changes, we are contemplating a move cross country to Florida in order to be closer to family.

If we move, I am not sure if I want to rent the house or sell it. Hoping to get your advice here or perhaps provide some creative ideas. As I get closer to a decision I know I need to meet with some local agents to refine these numbers a bit.

Reasons to Sell: I have a significant amount of equity in the house that would allow me to pay for a new house in cash. Having no mortgage with a young family is very attractive mentally, even if it is not 100% the right financial decision. Rental income likely would not cover the mortgage + taxes in my area. I would then poor my future savings into investment properties. Also, I have an emotional attachment to the house that may add stress when seeing renters not take care of it the way I would.

Selling now would let me take advantage of the $500k in gains on my primary.

Reasons to rent: I have a ridiculously low 2.1% 30 year fixed mortgage with WF. I don't *need* the money to fund the downpayment for my new house.

I don't think my mortgage is assignable, but is there any way to bring on an "investor" into the house to get best of both worlds?

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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
3y

I would just sell it outright. Personally not having a mortgage when you move is valuable. Would give you a great base when you move. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    3y

    I would just sell it outright. Personally not having a mortgage when you move is valuable. Would give you a great base when you move. 

    4Reply
  • Romney Salanoa
    New to Real Estate · Salt Lake County, UT · Member since 2023 · 42 posts · 16 votes
    3y

    Hey Jeremy,

    Have you thought about doing short term rentals so you could still visit your property on your days off. You might even be able to make more money than a long term rental. I don't know too much about the bay area but I hope this helped to see another angle.

    Romney

    1Reply
  • Todd Jones
    Member since 2023 · 243 posts · 199 votes
    3y
    Quote from @Romney Salanoa:

    Hey Jeremy,

    Have you thought about doing short term rentals so you could still visit your property on your days off. You might even be able to make more money than a long term rental. I don't know too much about the bay area but I hope this helped to see another angle.

    Romney

    Agreed.

    Short term/mid term monthly earnings may then cover the mortgage plus more. The bay area is extremely popular for short /mid term rental. Some mid term website only show bay area homes. 

    Downside is you will have to hire a team to keep it 100% presentable and outshine the competition. But I suspect the "unreasonable" items you placed into your forever home will give it an edge over competition.

    Try it first. If things become complicated or too stressful then sell.
    1Reply
  • Scott AllenBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 449 posts · 471 votes
    3y

    @Account Closed

    I would sell it if you think it would stress you out too much to see how renters would take care of it (too emotionally attached since it was a primary) as well as if the rental income is not able to cover the mortgage/taxes (that's just whack). I have also heard that California is not the most landlord friendly state. 

    Move to Florida so you can be closer to your family. Invest in the Midwest. Multi-family in Columbus, OH is pretty solid but I would recommend looking at and researching at least three other markets as well.

    If you used a government backed loan - it might be assignable 

    [email protected]614-698-1227
    Reafco - Columbus, OH
    WebsiteView Page
    0Reply
  • Erik Browning
    Lender · CO CA TX WA ID OR · Member since 2020 · 419 posts · 542 votes
    3y
    Quote from @Account Closed:

    Hi everyone,

    I spent 2.5 years building what we thought was our forever home in the Bay Area. We did things that would not make sense if I were building it as an investment property. Due to some life changes, we are contemplating a move cross country to Florida in order to be closer to family.

    If we move, I am not sure if I want to rent the house or sell it. Hoping to get your advice here or perhaps provide some creative ideas. As I get closer to a decision I know I need to meet with some local agents to refine these numbers a bit.

    Reasons to Sell: I have a significant amount of equity in the house that would allow me to pay for a new house in cash. Having no mortgage with a young family is very attractive mentally, even if it is not 100% the right financial decision. Rental income likely would not cover the mortgage + taxes in my area. I would then poor my future savings into investment properties. Also, I have an emotional attachment to the house that may add stress when seeing renters not take care of it the way I would.

    Selling now would let me take advantage of the $500k in gains on my primary.

    Reasons to rent: I have a ridiculously low 2.1% 30 year fixed mortgage with WF. I don't *need* the money to fund the downpayment for my new house.

    I don't think my mortgage is assignable, but is there any way to bring on an "investor" into the house to get best of both worlds?


    Don't do a STR in San Jose if you plan on leaving, you can only rent it out half the year: https://www.buildyourbnb.com/u...

    Since you built the home, I suspect it is nice and will attract good tenants - this is a good option for a long term rental. 

    If you do decide to sell, see if you can take advantage of the tax free option for selling, detailed in Section 121 of the IRS code. You just need 2 years in the property.

    I'm local if you want an agent referral, good luck bud!

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Account Closed- thanks - I would recommend selling because  1) its sounds like this is your gut preference  2) sounds like you arent looking to be a landlord  3) even with a low rate mortgage - the cash flow isnt there  4) you dont  have to use  all the cash to buy new  home ...you can  bank some of the  proceeds and  use some on new home   5) you can  buy a new  place  with cash  which should allow you to negotiate a better deal for the new place   6) depending on the  location  and price of the  property -  the  demand in bay  area is still  decent ....good luck

    0Reply
  • Account Closed
    OP
    San Jose, CA · Member since 2019 · 64 posts · 26 votes
    3y

    Thanks everyone for the advice. 

    Is it possible to get the best of both worlds? Can I take on an investor in my property (say 49%) to manage the rental and so I can get some cash out? We would share the benefit of the very low mortgage rate.

    0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    3y
    Quote from @Account Closed:

    Thanks everyone for the advice. 

    Is it possible to get the best of both worlds? Can I take on an investor in my property (say 49%) to manage the rental and so I can get some cash out? We would share the benefit of the very low mortgage rate.

    The hesitation I'd see in that is why would it be attractive to an investor? Also would it cashflow enough for a partner to be brought in? Selling still seems the way to go. You can buy investment property after you get settle
    0Reply
  • Account Closed
    OP
    San Jose, CA · Member since 2019 · 64 posts · 26 votes
    3y
    Quote from @Caleb Brown:
    Quote from @Account Closed:

    Thanks everyone for the advice. 

    Is it possible to get the best of both worlds? Can I take on an investor in my property (say 49%) to manage the rental and so I can get some cash out? We would share the benefit of the very low mortgage rate.

    The hesitation I'd see in that is why would it be attractive to an investor? Also would it cashflow enough for a partner to be brought in? Selling still seems the way to go. You can buy investment property after you get settle
    The two main things I can think of - get into the bay area at a lower cost than what otherwise would be available, at a ~2% interest rate. 
    0Reply
  • Jay C.
    Walnut Creek, CA · Member since 2018 · 40 posts · 29 votes
    3y

    @Jeremy Segermeister Would need to know more about the numbers, location etc. Dream house means different things to different people but it all depends on numbers and location. Feel free to connect I am local and can give better advice with more details.

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y
    Quote from @Caleb Brown:
    Quote from @Account Closed:

    Thanks everyone for the advice. 

    Is it possible to get the best of both worlds? Can I take on an investor in my property (say 49%) to manage the rental and so I can get some cash out? We would share the benefit of the very low mortgage rate.

    The hesitation I'd see in that is why would it be attractive to an investor? Also would it cashflow enough for a partner to be brought in? Selling still seems the way to go. You can buy investment property after you get settle

     If it won't work for you as a rental, it wouldn't work for another investor.  As you've said the benefits of selling are to pull out your equity out tax free and you don't trust a tenant to keep the place up (which is a fair point).  You can use the money to pay for a new house (or a large part of it to reduce your payments) and some of the rest for a rental property closer to your new home where the numbers are better.  California is also very tenant friendly and it would be hard to remove a tenant or not renew their lease.

    2Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    3y

    Just ask yourself "What could go wrong with renting my nice house? "   Lets see , destroy the house , non payment , meth lab , etc . And you are on the opposite side of the country .  California is tenant friendly , Florida favors landlords .  

    Me I would take the money and run , Buy a house in Florida , put what you need to down to keep payment low . Buy 1 or 2 small rentals , and get me a nice boat . 

    1Reply
  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
    3y

    Hi. If your plan is to live in Florida for the long term, it might be time to sell that house in SF and use the money to buy/build a new dream home. Assuming you're correct about your house not working as an investment property, it doesn't really make sense to keep it unless you planning to move back within a couple years. It's not an easy decision on keeping or selling due to the many reasons you highlighted. Personally, I would terrified to rent out property in CA due to the excessively-friendly tenant laws.

    0Reply
  • Hunter Purnell
    Real Estate Agent · Wellington, FL · Member since 2019 · 33 posts · 19 votes
    3y

    Sounds like you should sell, but it would be extremely hard for me to get rid of a 2.1% mortgage. I personally doubt that rates will ever get that low again. That being said in your case selling seems to be the best route. I wouldn't want to own property across the country unless I planned on going there at least a couple times a year. But some people do it, just doesn't fit right with me. 

    0Reply
  • Jeff Allen
    Real Estate Broker · Omaha NE · Member since 2019 · 30 posts · 31 votes
    3y
    Quote from @Account Closed:

    Hi everyone,

    I spent 2.5 years building what we thought was our forever home in the Bay Area. We did things that would not make sense if I were building it as an investment property. Due to some life changes, we are contemplating a move cross country to Florida in order to be closer to family.

    If we move, I am not sure if I want to rent the house or sell it. Hoping to get your advice here or perhaps provide some creative ideas. As I get closer to a decision I know I need to meet with some local agents to refine these numbers a bit.

    Reasons to Sell: I have a significant amount of equity in the house that would allow me to pay for a new house in cash. Having no mortgage with a young family is very attractive mentally, even if it is not 100% the right financial decision. Rental income likely would not cover the mortgage + taxes in my area. I would then poor my future savings into investment properties. Also, I have an emotional attachment to the house that may add stress when seeing renters not take care of it the way I would.

    Selling now would let me take advantage of the $500k in gains on my primary.

    Reasons to rent: I have a ridiculously low 2.1% 30 year fixed mortgage with WF. I don't *need* the money to fund the downpayment for my new house.

    I don't think my mortgage is assignable, but is there any way to bring on an "investor" into the house to get best of both worlds?


    0Reply
  • Jeff Allen
    Real Estate Broker · Omaha NE · Member since 2019 · 30 posts · 31 votes
    3y
    Quote from @Jeff Allen:
    Quote from @Account Closed:

    Hi everyone,

    I spent 2.5 years building what we thought was our forever home in the Bay Area. We did things that would not make sense if I were building it as an investment property. Due to some life changes, we are contemplating a move cross country to Florida in order to be closer to family.

    If we move, I am not sure if I want to rent the house or sell it. Hoping to get your advice here or perhaps provide some creative ideas. As I get closer to a decision I know I need to meet with some local agents to refine these numbers a bit.

    Reasons to Sell: I have a significant amount of equity in the house that would allow me to pay for a new house in cash. Having no mortgage with a young family is very attractive mentally, even if it is not 100% the right financial decision. Rental income likely would not cover the mortgage + taxes in my area. I would then poor my future savings into investment properties. Also, I have an emotional attachment to the house that may add stress when seeing renters not take care of it the way I would.

    Selling now would let me take advantage of the $500k in gains on my primary.

    Reasons to rent: I have a ridiculously low 2.1% 30 year fixed mortgage with WF. I don't *need* the money to fund the downpayment for my new house.

    I don't think my mortgage is assignable, but is there any way to bring on an "investor" into the house to get best of both worlds?



    Sell it. You have to much emotional attacehment to it and will never like how tenants treat it.
    0Reply
  • Kyung Min
    Member since 2021 · 1 post · 0 votes
    3y

    What is the monthly mortgage payments and what is the expected rental income?  Bay area is a place that would be investing for appreciation and rent growth.

    0Reply
  • Jesse D.
    Bay Area, CA · Member since 2019 · 8 posts · 5 votes
    3y

    What part of San Jose is the home located in? I’ve managed properties in the bay for over 10 years and work as a realtor. Short term rentals have never been ideal, but depends on which area you’re in. The rate you have is so low, and real estate in CA, esp the Bay Area is finite. We haven’t seen much slow down and homes are still going for over ask. I’d hold depending on what area it’s in. The emotional thing is something you just need to get over and look at it as a business.

    0Reply
  • Joshuam R.
    Rental Property Investor · FL · Member since 2016 · 271 posts · 92 votes
    3y

    All excellent answers and suggestions.

    I say your first option posted was the selling part which deep down you may already know within your new journey and circumstances is the way to go. But option 2 kicks in when you remember and realize the hard work and emotional milestone attachment of the "forever home" you accomplished and somehow would love to hold on to it.

    Let it go, and stay away from that phrase, Planet Earth is your home, and also even that us here is not forever.

    Best wishes! and once you get here, "Welcome to Florida!"

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    Sell

    All the info I needed was "Bay Area" 

    Sell yesterday and take all the benefits that come with freeing yourself from California

    A custom built home does not make a good rental. If you specifically built to rent that's one thing, but you didn't.

    SELL SELL SELL

    0Reply
  • Chad HalePro Member
    Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
    3y

    @Account Closed  There are some good thoughts in the above responses.  Do you think you will ever want/need to move back to San Jose?  If yes, it may be hard/impossible to get back in depending on your financial situation.  I know several people that left, didn't like where they went after a year but now can't afford to get back. 

    Regarding CA being tenant friendly, yes that is true.  However, there are still many good tenants here.  Good screening with high standards is essential.  I had 100% rents paid throughout COVID times.  Partially being blessed but good screening played a part I'm sure too.

    In a worst case scenario, where tenants destroyed the place, that is why you have insurance.

    In the end you need to do what is best and right for you and your family making the best decision you can with the information in front of you now.

    0Reply
  • Steven Gary
    Rental Property Investor · San Jose, CA · Member since 2016 · 11 posts · 6 votes
    3y

    Wow! That is a tough situation.  You built your forever home and now you might need to move.  There is much to consider here.  Converting it to a rental has many tax advantages such as depreciation. This would be a huge tax deduction if your financial situation is in need of that.  In addition, there are many good tenants here in San Jose so its likely that you won't run into any issues as long as they are thoroughly vetted by a local property manager.   Honestly, I think you need to ask yourself if you want to be a landlord or not.  I've owned rental properties since 2004 so you're welcome to ask me directly about the pros and cons.   Also check with your insurance agent about a landlord insurance policy and landlord liability insurance.  The 500k capital gain exemption is another option to consider because you never know if the exemption will be around forever considering the financial health of the country.  In the end, you need to do what's best for you and your family.  

    0Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    3y

    Tough decision, sorry you have to make it. 

    Curious to hear what you decided to do. 

    No shame in owning something cash, especially when it sounds like you have a super strong income. 

    Sometimes peace of mind is worth more than $.

    415-233-1796
    0Reply
  • Mike Anderson
    Rental Property Investor · Clayton, GA · Member since 2020 · 185 posts · 152 votes
    3y
    Any move from San Fran to Florida is a win regardless of the reason. Take the money and run the less San Fran is in your life the better.
    0Reply
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