Keep Family home to rent or sell to buy next home

3 Replies

So here it goes. I own my home in Silicon Valley. It’s worth around $1 million. I owe around $450k. I could rent it out and make about $1k/month. 

I am moving out of the area and am going back and forth between selling it and paying cash for a house elsewhere, which would be around $500k. I would then start with substantially cheaper homes to invest in where I am going. 

My question is this. Should I keep the house and use it as an investment and buy another home to live in? 

Or sell it? Having the opportunity to own my next home outright. Then begin investing from there. 

Let me know if this is in the wrong area. Any advice is appreciated. 

Hi @Matt Sobers ,

Welcome to BP!  If I were you I would buy a primary residence elsewhere (the lower the down payment the better as long as you are comfortable with the numbers) and rent out your current Silicon Valley place.  In the future (not sure how long in future for your Silicon Valley place to legally be considered a rental from a 1031 perspective), you can do a 1031 exchange to buy a new rental property. This would save you a ton with taxes - although it is in your best interest to speak with an accountant who can run the numbers for the different scenarios. 

@Matt Sobers Keep the property if you can. Especially if you’d be cash flowing. Put 3 1/2 - 5% on your next property if you’re able to. If you pay cash for your next property you’re starting from scratch. If you go purchase your primary home you already have a cash flowing rental in a high demand market. Down the line you may be able to HELOC, cashout refi, or 1031 exchange. By selling it you’re losing those options. Good luck with your decision! - Mike