I have my single primary house that I've been living and flipping. I've been living in it for 2 years. Now I owe $137,000 and the appraisal appraised it for $240,000. That's $103,000 of equity. If I sell it, ill walk away with about $85,000 and I'll use that to get a 3-4 unit house. If I cash out refi (my mortgage will be $1,000) and rent it out, I'll get $40,000 and $300 cash flow. Assuming Rent will be $1,600-$1,700. Furthermore this is a conventional loan that I have now on my house. Wondering if I do rent it can I use the $40,000 to get a second house but with an FHA loan ? Idk if I can do that though? Any advice. Not sure what direction I should take
Whats you goal?
@Bill Ward my goal is to build enough cash flow so I can quit my job. Or have the capability not to rely on my job
@Brandon Carrillo run some numbers. Find a similar multi unit you’re interested in. If you sold and got the $85k, assuming that’s after taxes, what multi unit could you afford to buy, and what are expected rents vs mortgage. Compare that to if you only refinanced and had $40k and kept the first home.
Trying t maximize cash flow sounds like you wouldn’t want to sell anything as you’ll need to expand you’re portfolio. How much cash flow would you need to meet your needs of not working? Find that number to find out how many rentals you’d need.
@Brandon Carrillo one thing to consider with the sell option is that the IRS allows for a capital gains exemption if you’ve lived in the home as your primary for at least 2 of the past 5 yrs. How long have you owned it?
@Brendan Miller 2 years. Im avoiding capital gains
@Brandon Carrillo you have 3 more years to either keep it as a primary or rent it out and hopefully let it appreciate a little more, at 5 years you could reassess sell vs keep. If you needed access to the equity you could refinance it or do a HELOC. I recently did this either one of my properties, bought in 2016, lived in it for 2 yrs and then rented out for 3 yrs and just sold this past month. I was fortunate that it appreciated heavily in the last 3 yrs, while still getting the benefits of loan pay down, and the tax benefits