Should we Rent or Sell?

Question

My fiancé and I bought a house outside of Boston, MA in Weymouth in July, 2020 for $430,000. We've done some improvements including laminate flooring and added a patio, and currently the Zestimate is at $515,000.

For reference we live in a 1 family cape in a neighborhood about 1 mile from the train into Boston, 3 miles to the nearest hospital, and a downtown that is only expanding. I am currently a travel nurse and we are looking to start investing/ buying multifamily properties in the next 6 months based on locations we travel/ our home state of CT.

Our question is, based on the information provided would you keep and rent the property knowing Boston is only expanding , our downtown is expanding, the location etc. and buy a more affordable multifamily or sell to reinvest in a larger multifamily or a couple multifamilies and start fresh. We are not planning on living or working within 2 hours of the Boston area anymore. We would love to hear some thoughts! Thank you in advance.

Chris Allen · Answer

Hi there Paige, I am a travel nurse as well, and I think you are definitely in the right mindset, but I don't think there is necessarily a "wrong" answer. A few things I have to ask and my opinion are

Question) Would this house have the ability to make money as a rental? At least enough to pay for itself and a little extra for future expenses.

Opinion) If this house can pay for itself, can cover basic future expenses and has strong potential for future growth, I would lean towards renting.

Q) Do you really NEED the cash to invest in something else or can your personal savings get you started in buying some multi?

O) Like above, if you don't really need the cash, then I lean towards keep. But if you know you need that cash to "level up" into a better investment, then I think its reasonable to sell in/after July when you have two years in the property to avoid Capital Gains.

Q) What type of loan did you purchase with? Conventional, FHA, VA, 20% down, etc...?

O) Depending on how much equity you actually have based on the down payment you did, it might be a great idea to go ahead and sell when you know the market is up and you are within your two out of the last 5 yr. But also, if you bought via FHA and you plan to hold, I would think maybe re-financing out of the FHA to get rid of PMI as well as freeing you up to use FHA again in the future, possibly for a multi family.

Nicole Heasley Beitenman · Answer

I agree with all of this. I'd keep it if possible and revisit your equity annually. It could give you a nice HELOC in the future.

Axel Meierhoefer · Answer

@Paige Hogan Hi Paige. I would keep it too and agree with @Nicole Heasley

You could probably already get the HELOC and use the money to invest in a property. Not sure if you really have to go the multi-family route unless you are like me and consider Duplex, Triples, and Fourplex = multi-family. That way you can use the traditional financing approach and generate cash flow.

In your profession, you might benefit from applying the turnkey approach., I have been doing it for many years and it works really well. I used to travel a lot from my consulting company and TK has always been very passive and I can always add more properties. Happy to explain in more detail in case you like to DM and set up a chat.

Paige Hogan · Answer

Thank you all for your input, lots of different avenues we can go. We will definitely be taking all your input into consideration.

Michael Blum · Answer

@Paige Hogan

It comes down to your “why.” What is your goal? Where are you trying to get to? Is another door now the best option? Is multi family better for your goals or single family? A clear picture of where you would like to get to (even if it changes) will help you make this decision

Myles M Miller · Answer

Paige,

Can you afford to buy another house without selling your current home? If so, leasing your current home out for a year would allow you to do a 1031 Exchange with your home and invest in some of the larger real estate projects you mentioned. A 1031 exchange allows you to sell property and reinvest without paying any taxes. Typically, you would save around 40%.

John Clark · Answer

First, just remember that a Zestimate isn't worth the paper it's printed on.

Have the property professionally appraised two ways, first as a sale, second as a rental. Check the comps the appraiser gives you as to what their value is now, and what their value was when last sold. That -- with due windage for improvements that buyers made after last sale -- should give you an (very rough) idea about appreciation. Run the numbers, act accordingly.

Should we Rent or Sell?

Most Popular Reply