Sell or keep as a rental

[Ashley Lynn]

It’s been a while since I have been on this board. I purchased my current home in 2012. If I sold it today I would profit approx $250,000. 

My end goal has always been rental properties and passive income. This is the only house we own. Our all in expenses are $1,100 but they are renting at $2,300, which is a nice chunk of change each month. 

My dilemma is do we sell or do we hold the property as a rental? My other dilemma is if we do sell, I do not want to buy in this market. It seems counterproductive to sell a low risk property just to buy a high risk property. 

We could live at my parents home for a year (it is their vacation home not their main home). But i would hate to go too long without a place of our own. 

Would you sell and reinvest the profit or hold as a rental?

[Kerry Baird]

30 yr fixed mortgage, cash out refi.  Stay one year, because of the terms of the mortgage that you must occupy for 12 months. Find an owner occupied house which needs a bit of "forced equity," and do the work.  Stay one year, turn last one into rental.  Do this again.  Annoying to move, but you can get the low down payment, low interest rate loans.

HELOC option would also work, without the requirement to stay for a year. But HELOCs are variable and more often used as a short term source of funds.

If you have no desire to move, and want to buy with investor financing, wrap your mind around other forms of financing earlier rather than later. Investment loans require higher down payments and a slightly higher interest rate. I find that jumping through the hoops (keeping DTI low, having reserves, high down payment, W-2 and all bank statements) is a pain in the butt. I prefer to use owner financing, and DSCR or non-QM investment loans.