Currently own a house with 150k equity, what’s my next move?

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Currently own a house with 150k equity, what’s my next move?

Roger Rosa
Orange, CA · Member since 2020 · 8 posts · 4 votes

Hello all,

Bought my first home 2 years ago in the California market, if you’re familiar with California it’s booming right now. Of course this opens up many doors, and more options tend to lead to hesitation and questioning.

I considered a few options:

1.) Sell my house, move into a better neighborhood where I feel comfortable starting a family. Larger payment but still comfortable.

2.) Pull a line of credit and purchase an investment property. Not sure where, however, I’ve considered Arizona market and Riverside county in CA. This is where all the options and decisions flood my mind, if I decide to invest, where and how?

3.) Sell my house, rent for a while and wait for house to drop in the neighborhood I would like to move to.

I did list my house and received an offer above asking. This would mean I would make 150k after realtors profit.

It’s worth mentioning I currently have a condo I just purchased and started renting. This was a deal I believed was good and profitable, and as of now have not seen any trouble in the horizon.

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Darius Ogloza
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y

Move.  

Being comfortable living in your own home in a neighborhood you like and starting a family transcends mere numbers.  If you have lived in the property last 2 of 5 years you will not have federal income taxes to worry about if you sell now.  Whether rent or buy right away depends on whether you see anything out there you like.   

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  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Move.  

    Being comfortable living in your own home in a neighborhood you like and starting a family transcends mere numbers.  If you have lived in the property last 2 of 5 years you will not have federal income taxes to worry about if you sell now.  Whether rent or buy right away depends on whether you see anything out there you like.   

    3Reply
  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    I'd put top priority on living in a home you feel comfortable in, since you are in Corona I'm going to guess that means more or less anything that isn't Home Gardens.  I wouldn't hold my breath waiting for prices to drop though if you sell and hope for that you could be stuck chasing rising prices for a while.

    1Reply
  • Pamela Sandberg
    Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
    6y

    Investing out of state is certainly an option to look into! Talk to local people to get more info that will help you make that decision. You'll feel less overwhelmed once you have some real war stories from people who have their boots on the grounds there. I'm happy to answer any questions about the Phoenix area!

    1Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Aaron K. @Darius Ogloza

    Thanks for the input. I am finding houses I like, and more importantly neighborhoods I believe will be great for a family. The challenge is it’s a sellers market, the same market that allows me to sell my property above asking results in having to purchase another property above asking, and it’s very competitive in the areas I’m looking. However I do understand setting my family and myself up in a comfortable position now

    1Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Pamela Sandberg what is the best way to find local investors and start those conversations?

    I would definitely be interested in picking your brain a little

    0Reply
  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y
    Originally posted by @Roger Rosa:

    @Pamela Sandberg what is the best way to find local investors and start those conversations? 

    I'm in Riverside, which is right next door, and am happy to chat.

    1Reply
  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    6y

    You may want to consider doing a cash out refinance and that would still allow you to rent or live in the home. You would have cash in hand as liquid reserves in an interest bearing account. That will allow you to have multiple uses that a HELOC cannot provide. For one should you buy another property banks/lender require additional PITI cash reserves and seasoning. The cash is also liquid to make a more aggressive and quicker offer. You also do not have to have a HELOC on a rental that may have liabilities attached to the open end account.

    [email protected]727-637-4289
    3Reply
  • Jon Schwartz
    Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes
    6y
    Originally posted by @Roger Rosa:

    Hello all,

    Bought my first home 2 years ago in the California market, if you’re familiar with California it’s booming right now. Of course this opens up many doors, and more options tend to lead to hesitation and questioning.

    I considered a few options:

    1.) Sell my house, move into a better neighborhood where I feel comfortable starting a family. Larger payment but still comfortable.

    2.) Pull a line of credit and purchase an investment property. Not sure where, however, I’ve considered Arizona market and Riverside county in CA. This is where all the options and decisions flood my mind, if I decide to invest, where and how?

    3.) Sell my house, rent for a while and wait for house to drop in the neighborhood I would like to move to.

    I did list my house and received an offer above asking. This would mean I would make 150k after realtors profit.

    It’s worth mentioning I currently have a condo I just purchased and started renting. This was a deal I believed was good and profitable, and as of now have not seen any trouble in the horizon.

     Have you considered finding a duplex in a neighborhood you like? I have a family (small, just me and a wife and our 2-year-old), and last year I discovered we could actually afford to live in my wife's dream neighborhood by househacking a duplex there. Now we pay less each month than our tenant, we're building equity, and the SFRs that surround us are selling for absurd prices.

    1Reply
  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @Roger Rosa

    A lot of smart money is selling and moving out of Cali. Go where you want to live. You can sell, rent, or finance the place as you discussed. Once you know where you are going to live the answers usually become easy. Life is short. Focused Priorities help with the decisions- if it’s not getting you to your goal it’s holding you back.

    [email protected]215-283-2868
    2Reply
  • Dan Schwartz
    Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
    6y

    @Roger Rosa are you in a position to keep the existing house AND buy a place in your desired neighborhood? That's the path I'd take. You haven't said what your existing house is worth (nor do you need to), but remember that getting a LOC that exceeds 80% combined loan-to-value will be difficult, if not impossible. So, some portion of that $175K in equity is not accessible. And as you've seen by listing your house, selling will eat a portion of your equity as well.

    1Reply
  • Jorge Tejeda
    Flipper/Rehabber · Redlands, CA · Member since 2018 · 1 post · 1 vote
    6y

    @Roger Rosa

    Number 2 is the best option. Get a Heloc and purchase a rental. Look for something that cash flows. Have the renters pay down the mortgage. You can also Airbnb it. You will take advantage of appreciation and depreciation on your rental. Perhaps even renting your spare rooms in your current home. CashFlow is the greatest.!

    1Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Jason Wray thanks Jason, this sounds much better than a heloc. Are there markets you recommend I look into?

    0Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Jon Schwartz we did consider this, and actually went to see two of them. We decided not to take this route because of previous bad experiences for my fiancé.

    0Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Carl Fischer moving out of California is a topic we have discussed a lot! Though we both want to make the move at some point, we don’t feel now is the time just yet (for family reasons). We still have some ties that require us to be here for now.

    0Reply
  • Roger Rosa
    OP
    Orange, CA · Member since 2020 · 8 posts · 4 votes
    6y

    @Dan Schwartz not comfortably, this would definitely push my budget (if I can even qualify). I would have to sell to get to the neighborhood we want and spend some time rebuilding savings accounts to allow us to invest in the future

    0Reply
  • Jarret Sa'o
    Rental Property Investor · San Diego, CA · Member since 2020 · 29 posts · 13 votes
    6y

    @Pamela Sandberg hi Pamela how is the job market in Phoenix area? Been browsing there lately looking for a rental property...

    0Reply
  • Cody Harris
    Nampa, ID · Member since 2017 · 67 posts · 24 votes
    6y

    @Jarret Sa'o if you are open to Idaho I would be happy to help. I have investment properties here and I am a Realtor/Contractor. The market here is awesome right now and still going up. A client of mine just bought a condo with a $800 payment he will rent for $1300-1400. Also the job market here is booming depending on what you do. 

    1Reply
  • Jarret Sa'o
    Rental Property Investor · San Diego, CA · Member since 2020 · 29 posts · 13 votes
    6y

    @Cody Harris Hi Cody, I’ve vaguely passed by Idaho on my search but I know nothing about the place. I’d be interested for sure. I’m new to the app/BiggerPockets community but would sure like to connect.

    1Reply
  • Cody Harris
    Nampa, ID · Member since 2017 · 67 posts · 24 votes
    6y

    @Jarret Sa'o pmd you

    0Reply
  • Pamela Sandberg
    Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
    6y

    @Jarret Sa'o: the job market has been surprisingly healthy! Like every city, we took a dip with COVID, but we‘be already made up a lot of ground. Our job projections are the next 2-5 years are strong!

    1Reply
  • Jarret Sa'o
    Rental Property Investor · San Diego, CA · Member since 2020 · 29 posts · 13 votes
    6y

    @Pamela Sandberg Thx that’s good to know!! Will be looking closer in AZ :)

    0Reply
  • Todd SolbergPro Member
    Rental Property Investor · Byron, MN · Member since 2015 · 71 posts · 34 votes
    6y

    @Roger Rosa. See if the numbers work to keep your current home as a rental, use some of the existing equity to purchase a house hack in a neighborhood with future being to turn that one into a rental when you move. Move every 12 months if you can and use FHA loans (3.5% down).

    0Reply
  • Dan Schwartz
    Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
    6y

    Sounds good @Roger Rosa.  Best wishes!

    1Reply
  • Jeremy Davis
    Contractor · Fort Collins, CO · Member since 2019 · 5 posts · 2 votes
    6y

    @Roger Rosa

    Would your current home be a good rental?

    One idea would be to cash out refi your current home and then rent it out and use the cash to purchase a new home where you could start a family.

    0Reply
  • Gerard Charles
    Rental Property Investor · Austin, TX · Member since 2011 · 30 posts · 5 votes
    6y

    @Darius Ogloza what’s 2 out of 5 years . I understand if you live 2 years you get to be waived from paying taxes at a certain amount . But 5 means what ?

    0Reply
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