Keep my first home to rent out or sell.

5 Replies

We are looking to purchase a home as our family is growing.

Should we sell our first property which is a condo, in order to complete a 20% home down payment? 

Or keep as a rental? But take out a mortgage with a 5 or 10% down payment instead.

The condo would cash flow approx $400/month, based on current rents.

Purchased for $190k and comps are currently around $265k.

I would suggest holding onto it.  Do you have enough for a downpayment on your next house without refinancing?  That's what I would recommend if you can.  Refinancing is expensive and even though you could roll that into your property, it reduces your equity.

What rent would allow for a $400/mo cash flow? That seems really good considering your PITI plus association fees and any maintenance that might be needed. Of course, is that $400 current or after a refinance. Because after refinance your mortgage payments go up and that could easily get eaten up.

Hey @Joseph Grullon ,

Sounds like you have a few options here.

Assuming you put down 20% to purchase and closing costs brought you to about $45-50K all-in, you're looking at gross returns of around 10% if you hold onto the property. Not bad considering the likelihood of you not having to do much by way of property management.

If you are considering selling, consider:

- broker fees

- other closing costs/fees

- capital gains taxes

and any other expenses you'll incur. 

At the end of the day, your next move should be in alignment with your long-term goal. Many folks on BP look to build passive income through rental property investments and it seems like you have that opportunity with the condo. On the other hand, some of your sales proceeds can go into another type of investment i.e. househack, rental property in Central FL or even Northern FL where there are more favorable returns, etc.

Best of luck to you moving forward!


@Justin Hoggatt I really appreciate your response and your time. 

Yes we would have enough for a 10% down payment on our next property. Rents in this community are going for $2100 and my PITI + association fees is approx $1700 all-in.

I was considering a cash-out refi, but may be better off not refinancing for the reasons you've stated. 

Overall, my main objective is to build my portfolio, although I've been struggling with the idea that rolling equity into my new home after the proceeds of a sale may or may not be a better option. 

Another factor to consider, is that independently from my personal investments, my brother and I are currently on our second flip. We plan to eventually keep one rental for every 4-5 flips we do. Therefore I will also be building a portfolio of rentals in my partnership with my brother.

Decisions, decisions...

@Abel Curiel I really appreciate your response. I am leaning towards renting out the property for the reasons you have already mentioned. Building passive-income definitely is a priority of mine. I have lived in this condo for 7 years and it has been very easy to maintain. But my girls are growing, so it's time to move into a bigger home. I think I will be making the right decision by keeping this property as a rental. Thanks again!

Great!  Keep up the good work!  It sounds like you've got a good plan going.  Another considering about the refinance is if your rent is too close to your responsibilities, you may have a harder time getting a new loan on your next house - talk with your lender about this and some options, they will be able to better help with scenarios and what you'll need to qualify.