Primary: To sell or keep?

[Greg Hellings]

So I'm only one deal into my REI journey. A flip last year that didn't go so hot, but I'm out from under it now. Taking my next step and it's decision time.

Situation: we bought a new primary residence one block over from our current house, back in June. Same neighborhood, HOA, even the same bus stop for our kids. Contractor work just finished up, so we will be moving in the next couple of weeks. The current house was bought in 2017 for $260,000, refinanced in 2021. We owe $149,000 on it at 3.1%, value is right around $475,000. PITI sits at $1550/mo. I have a local bank who just allowed me to open a $200,000 HELOC on it with no fees.

Option 1: I can keep the house and rent it out. It's on the larger side for the rental market in town and would probably command about $3200/mo gross rent. It cash flows easily. The neighborhood is desirable, so renting it wouldn't be difficult but it would be niche because of its size (4/3, office, dual living rooms, game room). I could still access equity through the HELOC for future expansion and the rent would cover HELOC interest payments while I stabilize future assets.

Option 2: I can sell it and pull all the equity tax free, since I'm married and it's our primary residence. I could move that equity into other projects, including properties that would rent for more efficient rates (rentals in the 3/2 to 4/2 2000sf range here tend to go for about $2200-2400/mo). The selling market is a bit soft here the past couple months, though, which is why we were able to get a great deal on our new house. My realtor friends say that our market in town always slows down the 3-6 months before a Presidential election before roaring back in November. 

I'm sure I'm missing some other options, but none come instantly to mind. Splitting this house isn't an option as our HOA is very strict about single FAMILY residency.

Does anyone have advice? What would you do in this situation? I plan to do at least 4 more deals over the next 12 months.