Analyze Primary Residence

[Jason Lieberman]

I am having a hard time trying to analyze whether or not to sell or rent my primary residence.  Any help would be greatly appreciated.  The details are below:

Current Equity=roughly $100k

Monthly Payment=$1600 (includes mortgage, Insurance, taxes, and HOA)

Potential Rental Income=$2000-$2200/month

Potential Appreciation=minimal

Potential Expenses=New roof (within a few yrs), new A/C (within a few yrs), normal maintenance and upkeep

Potential opportunity=use the equity from the sale to reinvest in additional properties for my portfolio which will generate a 12-15% return/yr.

Other details=I initially put about $22k down when I purchased the house 6 yrs ago and I have paid down principle of about $25k.  Most of the equity is from appreciation due to the purchase price I bought it for.

The cash flow from renting the property would be nice , however there will be some major expenses coming up.  I am not sure what the best way to look at the investment is.  I am also receiving a tax benefit with my current loan.  I am not sure if it makes sense to sell and take my equity out for reinvestment or keep the property and use the cash flow and for reinvestment and have someone else pay down the loan and build my equity.

I am happy to answer any additional questions.  Any help would be great!

Thanks,

JL

[John West]

You're definitely on the right track Jason, but as @Bob Langworthy has already pointed out, you can find a way to make that $100k work a lot harder for you. You could sell your house and use the cash to make a down payment on a multi-family that generates more than double that cash flow. Your tenants will pay down the mortgage on that property too. 

As for accelerating the pay down - I wouldn't, but that is my opinion. There are thousands of threads that debate this, but think about how cheap that money is assuming you're borrowing that money for <6%. I have made more than triple that return on all of my investments in the last 2 years.

10 years from now you could have one property paid off - not a bad accomplishment. 

10 years from now you could own 10+ properties that are 50% paid off. 

I know which one I would pick. :-)