Hi BP Universe! We have a big decision to make -- should we sell or rent our first home? I think this is going to be a hot topic for many given that the big driving factor is the low rate we have on the old house (2.7%) compared to our new house (7.1%). We have tried reaching out to numbers of local CPAs in the Sacramento area to have them help crunch the numbers and haven't had any luck at all. If you have someone in CA to refer, please do!

Here's the scenario -- we lived in our first home (3/1) for 15 years and during the pandemic cash-out refinanced at 2.7% 30-year fixed (have 28 years left), knowing we'd need to spend a lot to either rennovate or use as down payment if we moved. After years of looking, we finally moved to a bigger house in the same older and desireable neighborhood but with a much bigger loan and interest rate. We rented the old house for the past 6 months to give us some time to think and now that time's up and we still don't see a clear answer. We could sell the old house and net at least $175-200k (after costs of selling -- this is a hot market) and would put that toward the new mortgage (reducing our monthly payment and interest costs).

Alternatively, we can rent it at an amount that covers mortgage, taxes, and insurance, but not much more than that. It's an older home, so we've also had to recently sink $20k into things like a new roof and miscellanous repairs. As a result, it seems the value is really just very long-term and if we sold it in the future, any repairs and taxes would cancel out much of the gains (depending, of course, on the pace of appreciation -- who knows what that'll be?). Together, our mortgage debt on both houses would be just over $1m which seems really risky to us, but we've also never been "in" real estate before and thought about leveraging debt like this.

We are nearing 50 years old and have kids that'll be going to college in 5-10 years, so it's hard to commit to a 30 year plan that locks up funds without having someone to help crunch the numbers for us. We will want to retire at a decent age and also want to help the kids with college. I've tried and spent a crazy number of hours doing research on taxes and assumptions, but it's such a big financial decision that we don't feel comfortable navigating it on our own. We also know this is likely the only time we will be in this position and don't want to miss the opportunity.

Thanks for any advice you can share!

Sacramento, California

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