Keep and rent or sell primary home?

[Keegan Darby]

Hi BP - 

We're debating selling our primary home or renting it as we're moving to a new primary. 

We currently owe $222,000 on the property, our monthly PITI is $1,282 (a 2.375% interest rate)

It would rent for $2,000/month 

OR... we could sell it for $385,000. Our profit, assuming 7% realtor + title + closing fees would be $135,000 

We don't need the cash to buy our new primary home. The home is in a great (class A-), growing area. 

Would you sell or hold and rent? 

[John Dirks]

We were in the same position last year. We opted to keep our primary to rent. Mainly as if we sold we would walk with almost nothing due to a heloc and fees. And our rate is pretty much unbeatable. Much like yours is now.

With that being said, we learned some things along the way and there are factors you need to consider before making the final call. 

Make sure you can qualify for your new mortgage (assuming you are getting one) with keeping the old house. Only 75% of projected rental income can be used for DTI calculation.

You may not get the $2,000 rent as expected so be prepared if its lower in reality. 

You can always sell later. Still avoiding capitol gains taxes if within the "2 of the past 5 years qualification". Make rent now to see how it goes, sell later.

Also look at the equity in the property you have. The calculations say that only counting PITI, you will bring in $700 a month. If you took that $135,000 in equity, you could put $40,000 down (20%) on 3 separate properties. Can you bring in more than $700 a month after PITI on 3 $200,000 properties?

Lots of ways to cut it depending on goals. Personally, I like the rent now, settle into your new primary, then plan what to do with the equity in the old primary. You could even get a HELOC on it.