Rent or Sell Primary home, after relocating

[Corinne Mongillo]

Relocating to SC. Our primary home in central CT is worth $520k, we owe $200k on the mortgage. Monthly payments are $1900 (we have a 2.83% mortgage rate, 24 years left). We are looking to buy a house in SC for up to $500k. Current rental market would get about $3500/month for our home in CT ($1500 profit).

Rent the primary house in CT or sell it for $300k profit? 

Selling would lower our mortgage in SC, but keeping it and renting would become an income property grossing $1500/month until the mortgage is paid off, and then $3500+ a month once its paid off. Not to mention the appreciation the house will gain. Is it worth is to own one single family home as a rental? I am willing to hire a property manager to handle things while we are in SC. I should also add that the house has extreme sentimental value as it is my husband's grandmother's house and we are the 3rd generation to be raising a family there. But I don't want emotions to sway my decision making.

Sell for one time lump sum of $300k and have a $200k mortgage in SC, or keep it and have a passive income generating single family rental (which comes with alot of headaches). Should add that we would eventually like to own a multifamily, and this may give us leverage to expand our real estate portfolio. 

Any advice is appreciated!

[David Krulac]

Normally, i would lean in favor of keeping the old personal residence as a rental, but in this case, I would go the opposite way.  Sell the take the $300,000 capital gain TAX FREE, and put long distance rental in the rear view mirror.  However, I would not put the $300,000 into the new SC personal residence, but keep for other expenses or future investment. The mortgage that you get for the new personal residence will be the lowest interest rate and the lowest down payment, when compared to an investment mortgage.  For that reason I would borrow as much as possible on the new SC house and retain the $300,000 for other investments.