Quick need help - To sell or rent?
Hi,
I got myself into a predicament and could really use some help.
We have a condo that's been rented for the past 8 years - cash flow positive pre-tax/depreciation. Latest comp came in very high, $565k for a 1100sqft condo in same neighborhood. We expect a trolley/metro station to be completed in the next five years within walking distance. Great neighborhood, next to a fairly highly ranked research college - and within a 20 minutes drive to anywhere you would want to be in town (although the area has become so popular, traffic has gotten very bad -which is why trolley access is big). Our principal balance is ~$330k, so if we sold, net commissions, we'd have ~$200k. In general, due to low inventory, we see prices continuing to rise overall.
So the question is, do we sell and try to either upgrade via 1031 to a larger home (likely would breakeven on rent for next couple years or maybe negative up to $500/mo pre-tax/depreciation) or split into two properties (never done that before)... or just continue renting, maybe refi or take out a HELOC to purchase a second property?
The idea is that we'd like to better leverage our equity to take advantage of the potential growth.
The other question is, how much of a pain is it to do a 1031? Also, if it's an investment property, how much do you have to put down to not have to worry about proof of income for the loan? Or better yet, what are the debt-to-income ratio for investment properties? (We do have income that can cover the shortfall on rents but we have limited room in our debt-to-income ratio.)
We have a very good tenant lined up to rent our current property and also have an offer on the table for our property - so need to make a decision, quickly. Any help would be appreciated!!!
Thanks!