Updated over 1 year ago on . Most recent reply
Two educators looking into real estate investing
Good morning everyone!
I just wanted to take sometime and ask a couple of questions about getting started in the real estate space. My wife and I are both currently public school educators and I also happen to be a coach. So, as you can imagine we have made a couple of moves throughout our career.
We own a single family home in the last location. We have it rented currently and things seem to be going well. We purchased the home in the January of 2021 so our interest rate is decent. Our home value has also continued to grow year or year. We are currently renting, as I just began a new job this fall. With the increase in value of the home would it be worth selling it once our current renters move out? Will having that home on our credit negate us from being able to seek additional loans for other properties?
Thank you in advance for your responses.
Most Popular Reply
First, you should know that 75% of the rent on the lease counts towards your income. If you have a rent property with good cashflow, odds are you are BETTER qualified for the next mortgage than if you sold the rent property. The downside of trying to get a mortgage after you have a rental is that you can't walk into any bank because they do not understand how to calculate DTI correctly. Talk to a company that works with investors.
Frankly, I would hesitate to sell the property. If you had sold it a year ago, you could have taken the homestead deduction and paid zero capital gains on the increase in value. However, if you sold now, you would be hit with capital gains tax and depreciation recapture.
Finally, I recommend you check out Lifestyles Unlimited. They provide great education on how to properly buy and manage rent property and they have a huge physical office in your backyard.