To Hold or To Sell - pros and cons?

[Patrick Dawson]

Hey everybody, 

I’ve got a question or 2 that I need some help with. 

Roughly 6.5 years ago I purchased the home that I live in now. Like most people, I purchased it hoping that it would appreciate. It’s a 3/2 on a double lot (1/2acre), with an in-law suite in the basement. I was fortunate enough to rent out the basement for a while before my wife and I tied the knot. So here’s the dealio:

I purchased the house for 105k with a 30yr (fha) mortgage. Somewhere towards the beginning of the loan, I got the bank to agree to weekly payments of $200 with it going towards the loan. My actual monthly payment is ~$700. 

The house is now worth ~250k, with property values only increasing at the moment. The inside is fine but the property could likely fetch closer to 300k with new baths & a new kitchen. When I bought there was a govt housing building, now there’s townhomes starting at 600k. 

The house will rent for 2000-2400 depending on if we rent the basement separately.  

My wife and I have decided it’s time to move. We own a business and work full time at other jobs. We make enough to cover both mortgages if needed and have saved enough to put a down payment on any house we’d like to look at. 

Eventually we’d like to acquire a commercial property for our business but that’s likely going to be a little longer. 

If you’ve made it this far reading, what would you do? 

I’ve floated every idea! from living in the basement while renting out the upstairs just to “save save save”  to combining property with my next door neighbor in order to build high end townhouses. In reality I only have a few options. 

Would you rent the house out? It’s $700 a month. With the .5 rule we’re still profiting $500 a month. Depending on how it went, we’d eventually like to acquire more rental property. We’re going to be moving within 20mins of the house. I started my life as a contractors apprentice then moved onto structural architecture so I believe i’d be a competent maintenance man. The house has a new roof, new hvac. By my highest estimations we’d need ~$2000 in maintenance before we put it on the market for RENT, mostly paint that we can do ourselves. 

Should we sell? The profit potential is really appealing. It’s ALMOST enough to combine the “non reserve” & no longer have a mortgage. Almost - We’d be close. We could walk with 150 tomorrow. 

We could sink 20k into it & try to get top dollar for it. 

I’m really leaning towards keeping it & renting it out. Maybe try to use the profits to start fixing it up? 

I feel like I’m rambling. So TLDR:

Bought the house for 105k

Current value: 250k

Mortgage: $700

Owe: ~80k

Rental potential: 2000-2400

Other notables: property values rising exponentially, comps 3-400k, walking distance to hip shops, hospital, breweries, etc. 

Also if you do keep the house, would you attempt to purchase the next house using equity if possible? (I don’t know if it it lol)

Thanks for lending an ear, 

Awesome Bill From Dawsonville