A wonderful problem: How to use my equity

[Morgan M.]

Wife and I bought our 1st house all cash in Sonoma County in October ‘08. It has nearly doubled in value since then. We currently live rent free, and rent that house out for $2,350 after management fees. Safe to say we net cash flow $1,700 a month.

We are a single income right now and I’ve only had the job for less than a year.

We are interested in short term rentals and taking a more active role in management but we're fairly convinced we are at or near the top of the market. Better to take a mortgage and invest in low price STR or should I consider selling?

The house isn’t earning a great rate for us given that it is worth roughly $600K.

[Frank Wong]

Hi Morgan,

It all depends on what your business plan and options will be. $600k and netting $2,350 is not great. To get a higher return you will need to go to STR or go out of state.

In your case, you said "we're fairly convinced we are at or near the top of the market" I think your mind is made up.  You could sell then reevaluate afterward. Sit back and then take your time. Closing costs will probably be 6-7% of the total sales price of your house.  That will be realtor fees escrow title and closing fees.