Keep or Sell Current House

[Arta Montero]

I purchase an 1800 square ft and 4 bedroom for about 450k one year ago. Main reason we focused on this area is the schools. Three days after we purchased they announced middle school boundary change and the new middle school will have a much lower rating.

I could now sell this house and hoping break even after the realtor fees. Interest rate is 3% and we had only put 10% down.

Should I sell and purchase another home on the school boundary I intended to be or should I rent this one and purchase another one in the school boundary I wanted or is there any other better option given that I haven’t built much capital and this house will more likely not cash flow.

[Will Fraser]

Hi @Arta Montero, I'm sorry to hear of this frustrating change!  Is there any change you have a right to choose which middle school your child attends based because of ownership predating the boundary change?

If not, here is the sticky wicket regarding the decision ahead -- you'll want to be sure that your current home won't cashflow.  Check the rent comparable.  Ideally speak with a savvy property manager to get a certain feel for the rent value.

• IF your home will not break even at least when operated as a rental AND you could get your capital back out through a sale, I'd rather redeploy the capital into a different home (preferably one with some investment benefit) than keep it parked and lose money every month.
• IF your home cashflows as a rental property AND you have the capital to purchase another home, in the school boundary you are chasing, then the happy news is that you accidentally acquired a rental property! 
• IF both options lead to a net loss, then it probably comes down to:  which move is going to simplify your life in a way that encourages you to your Vision for life? 

I hope this is useful!