Buying/Selling Real Estate in Loveland and Fort Collins Colorado

[Connor Maloney]

Hey guys,

My brother lives in Fort Collins, CO.  He is moving to Loveland, CO for his job.  He currently owns his house (5 BR, 3 BA) in Fort Collins that he has about $100,000 of equity in from his payments and appreciation over the past 5 years.  

He wants a rental, but owning a rental in Loveland makes more sense to him because he will be living there.  However, he is not sure if it is a good idea to sell his house in Fort Collins to buy a nice house in Loveland and another house to rent out in Loveland.  

Does anybody have any advice for my brother??

I do not know how good the rental markets are in Loveland or Fort Collins, but I do know that property values are very high in Colorado right now.  So I didn't think it would be a good idea for him to sell right now.

To me, it makes more sense for him to rent out his house in Fort Collins (not sure how well a 5 BR, 3 BA on the edge of town will rent) and then take out a home equity loan to use as a down payment on a new house in Loveland.  Then, when prices come down, buy another rental in Loveland.

Thanks for any suggestions!

[Bill S.]

@Connor Maloney so from a strictly financial standpoint. Sell the house in Ft Collins and buy a rental duplex or more unit property Loveland. Live in the multi in Loveland for a year and then refi out his equity and purchase a primary residence in Loveland. The advantage is the owner occupied rates for the multi-unit property and the higher LTV for the cash out refi after a year. If he does it right, he might even have enough equity to buy a third property.

I am not a fan of HELOCs as I think we are in an season of raising rates.

A large house is a lousy rental property. He can take his capital gains free of taxes by selling now.