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Do I buy a second home and rent out my first?

I’m in a bit of a pickle. I bought a home in 2019 that I have a 2.5% interest rate on and about $175k of equity in.

Since then, I have started a family and would like more space for the kids to run around. The question is, do I sell my house and buy a nice house by putting all of the equity into it? Or do I buy a slightly better but similar home in a worse area than what I’m in now and rent out my first home?

I think I could make about $700/mo profit by doing that, but I’d have to use a chunk of that to pay off the HELOC I’d have to take out for the down payment on the new house.

I think long term that it’s better to keep it, but if I keep it, the new house we would get wouldn’t really fit our needs unless we moved out of state.

Any advice would be appreciated.

submitted by /u/klaysmithhh
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source https://www.reddit.com/r/RealEstate/comments/15v9nlq/do_i_buy_a_second_home_and_rent_out_my_first/
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