Should I sell my House?

7 Replies

Hi BP,

I currently own a home that was originally purchased using VA Loan in 2006 for $219,000 and could sale at retail for about $280,000 now. This is considered a Class A Neighborhood where all of the new construction starts at 400k+ now (Cary NC). I bought it with the intentions of renting it out after i moved out in the future. It could currently rent for about 1600-1700 a month which is less than the 1% rule but would leave about a $300-$400 spread after paying mortagage. I have other rentals currently. I am interested in buying a new personal home next year around January so if I sale it I could use my VA loan again, but if I keep it I could just use FHA since I have never used one. Looking for advice. Would you sell or keep it?

Hello Louis, I am a beginner whom has made some mistakes. I am retired military. I have used my VA but sold the property so I now have it available.

In any case, my biggest mistake was when I took equity out of my residence to buy a bigger and more expensive house. At the time, I didn't need to because I didn't have to move. I was just wanting something bigger, better and something to say to myself that I was moving up. Although I was moving up, a wiser move would have been for me to stay in that house rather than renting it, take equity out of the house, buy a rental house and rent it for passive income. All I did was buy a bigger house with a higher mortgage and payment which resulted in more debt.
Unfortunately, the housing bubble popped and I found myself upside down in a loan. At the time, I was living in Northern California.

Depending on your situation, your goals, and your reasoning for buying a new house consider your alternatives wisely. I hope that sharing my mistake will help you in making your decision.

Nice to know that you are doing well. God bless, Tracy Sharpe

Hi @Louis Bratt

You may want to check and see if you have any VA entitlement remaining. If you do, it may be possible to have 2 VA loans out at once. You'd obviously want to run all the other numbers to determine if the property you currently own would make a good rental, etc. But just know that you don't necessarily have to sell your home in order to use your VA loan again. Here's a BP blog post I wrote about this topic with some calculation examples:

Thank you for your service.

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Tracy and Samantha thanks for your responses. I still have a nice chunk of entitlement left. One option I am thinking about is using it to purchase a live in rehab but then refinance when it is complete, rent that one out then buy another one using FHA. I am a buy and hold investor.

My personal opinion: it depends on your long-term goals/strategy. Are you looking for cashflow or just equity in properties? Certain number of doors? If you run all the numbers and it fits your strategy then go for it as a rental...but does that 300-400 after the mortgage really cover all expenses including Cap Ex? That's my biggest question. Because you want it to cashflow beyond all expenses.

Also, if you stayed in it, any way to pull out the equity you currently have and use that to get into other properties? I've been trying to look more into that since Brandon talks about it all the time in the podcasts...but here's a question for anyone else answering on this forum...If you refinance, your payment obviously goes up, so you just account for that in re-running the numbers? Don't you lose cash flow doing that? I guess you're hoping for rents to increase as well though, right? Just trying to understand the process because it sounds awesome.

@Louis Bratt I love Cary, and I would hold on to any property I owned there. I think you will see some nice appreciation between now and your retirement. Cash out then. Use the rest of your VA entitlement for another loan and keep this one as a rental. The only way I would sell this is if you were going to move your money into a different market

I agree with @Dawn Brenengen . I keep trying to get deals there and can't find them. I went to grade school there before they built Cary Parkway. I've seen nothing but growth there in the last 30 years, and it  continues to look that way every time I visit.