Hi all, this is my first post and I am new to real estate investing. I currently own a SFH with about 50% equity in the prop. I'm wondering if I should try to keep this property as a rental. I'm currently in the process of refinancing in order to get the monthly payment low enough to get it to cash flow. Using the rental calculator I would be close to breaking even, meaning almost no cash flow, but why should I pay all those closing fees, etc when I could just get someone else to pay down the mortgage. That way I could also use the equity in the house to pay for my next investment. Is my thinking flawed on this? Any help/ advice would be greatly appreciated.
Why not sell it and reuse the equity to buy a better rental
There are a lot of moving parts to consider. First if it was your primary home for 2 out of the last 5 years you can sell it and avoidall capital gains tax up to $250K if single, or $500K if married. Next, will your property make a good rental? Run the numbers and see. What willl it rent for? How much are mortgage payments how desireable is it, neighborhood, etc. Next how good of a rental can you buy? Will a new rental make more or less than your residence? Once you figure out the answer to some of these questions you can more easily answer whether to keep or sale it.
After the refi I'm looking to get a heloc to help fund a new construction home on a piece of land that I own free and clear. When the new house is ready I move there and keep the first one as a rental. If I refi the numbers look like this
SFH comparable in my area are renting for $1500-1800, so I may only break even but I would have someone else paying down the mortgage. Otherwise I would just skip the refi and use a heloc for the new construction and then sell the old house when ready to move in. We plan to stay 2yrs to avoid capitol gains and then sell the new property b/c the taxes are outrageous!
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