[USER]

I haven’t informed everyone in my life of this move yet. I plan to move out of state and am having trouble deciding whether to rent out my current house or sell it.

I have about $200k in equity and a mortgage with a 2.75% interest rate and about 26 years left. It’s an old house in a highly desirable neighborhood.

Houses in my neighborhood go under contract within a couple of weeks of listing.

I could rent it out but would need a property management company because I’ll be out of state. I would still technically cash flow a bit, but because the house is old, I would need to reserve a fair amount for repairs that might come up.

Selling with a 2.75% interest rate seems wrong. On the flipside, using the equity for the new house I’ll buy out of state also seems to make sense.

Do any of you have advice on how to make the decision?

I plan to have a property management company and a realtor come to the house to go over numbers with me, but I can’t help but feel that there is a clear answer.

It’s hard when the house I have has a 2.75% rate (hard to let go of) and a new house would have a 6%+ rate (hard to swallow by comparison and makes me feel like I should use equity to increase down payment?).

[Aaron]

When you sell a house you lived in 2 out of the last 5 years you have huge capital gains tax exceptions. It’s very hard to justify any other move mathmatjicaly .

Math wise it would have to be a house where say your equity was many times higher than the amount protected from tax to justify this and probably an area that will Keep surging longterm.

There can be other bigger picture reasons to keep a house but none of them have been described so I would sell in your situation.

[Rick]

Sell. It’s the answer to 99%.
Can it work, sure. But so can the true “passive investing” of a few mouse clicks to buy your preferred etfs.

And odds are stacked well in the favor of etfs over previous primary residence turned rental with “technically cash flow a little bit”.

[Stacey]

Sell it
Old house, with one bad tenant or bad management company and you are in the hole

[Amanda]

How far out of state? If you rent it out, you might still need to come back sometimes for emergencies or to check on large repairs.

[Shannon]

You should cash flow at minimum $200/ month in order to have a buffer for when things need to be repaired/replaced and/or vacancies between tenants.

Otherwise you wind up subsidizing for someone else to live there which doesn’t make sense.

It sounds like the correct answer is sell and use for next house down payment.

Don’t build a house of cards.

[Juliett]

Do you plan to come back to this state? No? Sell it. There’s an opportunity cost.

[Michael]

Becoming an unintentional out-of-state landlord of an older property that barely cash flows? Absolutely not.

The list of ways this can go wrong is long and exhaustive.

Take the win and sell.

[Susan]

Is your rate assumable? If so, you can have a higher asking price without it affecting the new buyers bottom line.

Remeber if you have owned and lived in that property for two years that 200k in profit is tax free right now.

That might always be the case

[Jeremy]

Fastest way to grow wealth is own real estate. Have you considered doing a HELOC to pull out of some of the equity to buy the next house and then keep the house as a rental?

Don’t have to touch the 2.75% if you do a HELOC and you leverage your equity to lower your mortgage on the 2nd home.

That’s what I would do.

I’m in mortgage as well.

[Author]

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