Anaheim, CA · Member since 2016 · 1 post · 0 votes
I currently own my current home in Anaheim Hills, CA free and clear which current market value is appx $575K. I paid 390K 6-years ago.
I am looking to purchase a larger home for my growing family and looking in the same general area with a budget of $850K
I have $300K cash to put down towards the new mortgage. Do I sell or rent out my current home? Of course the wisest decision financially would be to stay put in my current "paid off" home... but it's getting cramped.
Chris Robner I would say Sell. I say that so that you can lock in your capital gains and Not have to pay anything to Uncle Sam. You can buy another home with as little money down as you can afford comfortably and then go out and buy your rental. If you are really conservative then just buy another home with the cash. The problem with that is you are earning Zero interest on your equity.
The other reason may be are you able to cash flow of you do lease it? What will it look like when you get it back? Also Uncle Sam wants his portion of any profits each year and when you eventually sell it since it was converted to a rental.
Let me know if you need anything else.
Good investing.
Hi Chris!
I would say sell as well, unless you can rent it for at least 4000-5000 per month. It won't make you a good enough return if you just rent it out for less than that. (Even 4-5k isn't a very good return, but it's not horrible) You could use the money you made from selling it to buy your new house and put a down payment on an investment property like a duplex or quad somewhere were rents are higher compared to the value of the home. If you have been living in the house at least 2 out of the last 5 years (I assume so since you bought it 6 years ago) then you should qualify for capital gains exclusion of 250k or 500k if you are married, which means you won't pay capital gains taxes on the profit if it is less than 250/500. PM if you want to chat more about this. I would love to talk to you. I own 8 apartments and love that form of extra income.
I agree with our local colleagues,sell.Only use enough of the proceeds to put down a sufficient down payment on a larger home that meets your needs and a comfortable monthly PITI payment.Use the rest to put on down payments for multi family rental properties in great cities like Memphis,Indianapolis,Cleveland,Dallas,Houston,or San Antonio.Think long term profits over time and immediate cash flow