Should I sell or rent out my current home?

[Rich Pritzker]

Folks, Newbie here - so please be a bit soft on me...:-)

I own a home (#1) in the Nor-Cal South Bay-Area - which I bought a few years ago, for a little under $800k. Current mtg is $1300. Property tax is ~$900/mo. Add Home Warranty, Insurance, Gardener - to total upto $2400/month. Expected Rent is approx $3800-$4000 / month. So Cash-flow wise, I'm sitting ok if I only look at this property. Also, current Valuation of the house is approx. $1.4M.

Now- here's the complication - We just bought a bigger house #2 (our new primary residence) - for approx. $2.5M - with 20% down. The mortgage amt on this one, is approx. $2M. We know that mortgage interest is only deductible for upto $1M loans - so the interest on my second Million on this mortgage - is costing me post-tax $.

Annual household Income is approx $320k.

Both schools are in top school-districts (Elem/Middle/High are all rated 10/10).

I'm a bit nervous about holding house#1. I bought #2 at a high. Should I sell #1 when the market is up, too? It's a sellers market in the South Bay currently - but not sure how sustainable it is? How long it will continue...

If you were in my shoes - what would you do? Hold on to and rent house #1? or Sell it and pocket the $500k Cap gains and move on?

Thanks in advance!

-R

[Account Closed]

Originally posted by @Thomas S.:

Sorry I am a investor not a speculator.

Greg, does your cash faux guru confiscate your

dictionary when they take your money?

speculation

[ˌspekyəˈlāSH(ə)n]

NOUN

1. the forming of a theory or conjecture without firm evidence:

There is plenty of evidence that supports appreciation rates and rent growth.  Why choose to ignore it?  And who is convincing you that cash flow is profit and that it is guaranteed?  Drinking the Kool-Aid?