Trying to determine what the best wealth creation decision will be?
Situation: Were just about to finish closing on a new upgraded home (B) to live in, however still own our first home (A). We are debating renting out or selling home A. Were not sure if the wealth creation from renting home A is worth becoming a landlord.
Stats: Home B: $1.5M, with 20% down, at 6.7% ARM (7 years).
Home A: Market value $625k, $405k and 27 years left on the mortgage at 3.15%. Property tax $8k, HOA dues $600\year, insurance $1.7k\year. Its a 30 year old home where weve already made some maintenance investments (new roof, new appliances). Not expecting major repairs, but lets assume $6k\year at 1% of the home value?
Option A: Based on comps, we should be able to rent our home out for $3800-$4200\month (good school district, low inventory for single family homes in the area). We would eventually sell once our equity gets higher, interest rates drop (which we believe will trigger a higher purchase price easily +5-10% over current value). No idea when that will be. We would definitely use a management company to start
Option B: Sell home NOW and put $200k equity cashout towards our new home to help save on the 6.7% interest rate (we considered investments like tbills and bonds, but avoiding the 6.7% seems smarter and safer).
About US: relative High stable income couple (600k+\year), strong cash equivalent reserves, 2 kids. Limited free time, and really wonder if renting out is the right decision for us. While the numbers may indicate renting out (maybe), not sure if its worth it.
Thoughts?
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source https://www.reddit.com/r/RealEstate/comments/17stkt5/should_i_sell_or_should_i_rent/
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