Which house should I keep, rent, or sell?

[Amanda Tanner]

My husband and I have had our main home for 11 years. Two years ago we got a screaming deal on a family property which we purchased (with a mortgage) and then did a complete remodel. Now we need to make a decision on what to do next. Main home has approximately $120k in equity, 2nd home has approximately $200k in equity. We would like to move and upgrade to a bigger house but we need to decide if we should try to keep both existing houses and rent both out, or if we should sell one house and keep one for a rental. Main house would rent for about $600/mo more than mortgage, while the 2nd house would rent for about $1000/mo more than mortgage (for simplicity I'm not including any additional costs). Selling one of the houses is appealing because it gives us a bigger down payment for a new house, without it we would have to pay PMI on a new mortgage. We would also have the option of taking a portion of the profit and investing in other things. But keeping both houses is also appealing to have a net cash flow plus additional years of rising equity. We have excellent credit and have a pretty good idea of what we would qualify for regarding a new mortgage. But the biggest question we have right now is what is the best move with the 2 houses we already have. Any insight or "what would you do" scenarios is helpful!

I think I should also note, the main house is in my name only and would not be subject to capital gains tax. The second house is in both of our names, we've owned it for over 2 years, nobody else has lived in the house so I am not 100% positive but I "believe" we would not need to pay capital gains since this is the first and only house with my husband's name on it. Any insight into that is also helpful. Thanks!