[USER]

Hello Folks ….need some advise on a situation I am in .me and my wife make a combined yearly income of 400k + live in a HCOL .We have two beautiful kids 9 and 3 .

We are currently in a townhome where the value is like 750k and we will be free of mortgage in 2030 (i have it at 2.25% interest and we pay close to 4500/month for a 10year mortage in total).

If we rent it out i get around 3500-3800.(still a deficit of 1000$)

We are looking to purchase a new single family home costing about a 1.2 mil.

One part of me says get over the payment of my current house rent it out and then buy a new home ,other part of me says to buy a new home as the kids are growing up.

we have 150-200k in hysa and I also 350k in my brokerage accounts (if i am keeping my townhome would like to empty my brokerage account towards downpayment.

Please guide me on what need to be done .I know the decision will be mine but looking for some clarity.

Thanks all for reading !!!

[Sartaj]

Unless you want to be a landlord and gain from speculative future value, I think I would sell the new home you buy will also gain equity right?

Wouldn’t the 4,800 payment still be a burden if it’s vacant or needs repairs?

Do you want to simplify or push more equity?

[Shiao]

Sell and apply proceeds to new purchase to reduce expenses

[Huang]

We are in almost identical situations. So, I’ll share our thoughts. Our combined income is about 600k in HCOL area with 2 kids in a townhouse valued 750k with 2.5% interest with about 2-3 years left of mortgage.

We could get about 3.5-4k a month if we rented.

We’re looking to purchase a single family around 1.2-1.3M and have about 250k in HYSA and about the same in brokerage.

We debated renting the townhouse and taking a higher mortgage on the single.

However, after doing research on the cost of hiring a management company, or the cost of doing it yourself, and factoring in being a landlord, and losing flexibility of having that much cash we decided that we would sell.

It’s important to us to maintain a mortgage that’s feasible to maintain if one of us loses our job for any extended amount of time, and to cash flow private school for our kids.

With the current mortgage rates, we’d be paying several k more per month, and we’d rather put all of our money into paying down the mortgage as fast as possible to reach fire.

We can always purchase investment properties down the road if we want.

Good luck!

[Rod]

Remember, you could lose your tax exception on your primary is u rent it out. You must have lived in it the past 2 out of 5 years.

$500k capital gains protection is big

[Maribeth]

Being a landlord is a huge pain, and often expensive. Tenants are a gamble. I’d sell the townhouse and move to your new home now.

Appreciation on the SFH is likely to be much better, and your family will be more confortable.

If those brokerage accounts are qualified (IRA or 401k) then taking money out would be a big mistake.

[Mindi]

I would not rent a property knowing I would be losing a minimum of $1k/month, not to mention the repairs and maintenance costs.

I also wouldn’t empty my brokerage account to buy a house, you’re exchanging an asset for a liability.

I would sell the townhouse and use the equity towards your new house.

Or just stay where you’re at, kids don’t care how big or nice your house is.

[Paige]

If you want to keep the townhome and rent it out after you move out, you can either accept that you’ll have a loss on it for the next 5 years and factor that into your budget or you can refinance for a smaller payment to where it will cash flow.

[Maggie]

Why wouldn’t you sell? I absolutely would not keep the townhouse unless it cash flowed by itself.

[Christina]

Do you want to be a landlord? How tenant friendly is the city your townhome is located? How much capital gains if you sell?

[Author]

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