Updated almost 2 years ago on . Most recent reply
Sell or Keep & Rent
Good night everyone.
A little late to be posting but wanted to get some of those mid-night thoughts flowing. My wife and I currently have a great house that has the almighty low interest rate of 3.5%. Now the house is older, late 1940's but was remolded before we purchased it. Our family is starting to grow and my wife is wanting to get into something a little bigger and I want a bigger garage or shop.
After discussing with her, due to the age of the house she is wanting to get out from under it as there are some cosmetic issues about the house that would just take the time and funds to do (like replacing some of the laminate wood slats, harder to find an exact match than anything). But my thought is to turn the house into a rental. With slapping a fresh coat of paint of the decks I think it could be a very marketable rental. The only road block I have with convincing the wife, how do we come up with the 20% down for the next house? If we were to keep the current house we wouldn't have those funds. Which is my dilemma of selling or keeping. And based off of the price and interest rate we have, I don't really want to let if go.
Any input is appreciated.
Best Regards
Most Popular Reply
#3 Managing Your Property Contributor
If you've lived in the house for more than a year, you don't need 20% down to buy a new house as your primary. You can rent this one. How much has the value of the house gone up since you bought it? If it has gone up a lot, consider selling it to avoid capital gains. If you rent it out for more than 2 or 3 years and then sell it, you have to pay cap gains on the profits.
I'd also run the numbers on the house to see what you'd get for rent and what all of the costs are associated with the house (property taxes, insurance, repairs, vacancy as well as mortgage payment). Not all houses make good rentals.