Ideas to move forward

[Mike Jennings]

Situation: I own one property that is currently rented until April 2025 in a different school district. We moved in with a family member to help them out. My kids began school in this new school district and are thriving so we want to keep them in their current schools.

Wanted outcome: I want to keep some version of an affordable residence for my kids to use as they start out in early adulthood. I also want to get a house in their current school district (as living with this family member is becoming too difficult).

The current area we are living in is very expensive (Boerne, TX) and is a heavily deed restricted region. I have about $175k in equity in our rented house (2.79% mortgage rate). Suggestions on moves? Acreage with additional structures is probably not an option. HELOC for second property? Sell current rental? Self contract 1-2 new builds with equity? Bet it all on black in Vegas? lol. I need some outside input. Any help is appreciated.

[Sherry McQuage]

Hello Mike,

I don't know if Texas lenders have a problem with it, but here in NC lenders really don't want to let one open a HELOC on a rental property. (Unless you opened the HELOC while you still lived in it.)

So, you probably need to run the numbers on alternatives. If you refinance the rental house and get the equity out, you'll end up with a higher interest rate and a good amount of cash to use on your next house. Since you'll be looking for a house to live in (primary residence) you'll get better loan terms/interest rates than if you were buying it as an investment property. If you could find a duplex property (or a single family house that could be turned into a duplex--check any HOA restrictions first), or a "fixer upper" to live in, that could be a better use of the equity you have in the rental house.

If you run the numbers and decide it makes sense to sell the rental house (check with your accountant, figure out closing costs to selling and buying) then you'll possibly have more money to put towards a primary residence.

You may want to check the neighborhoods that fall in the school district you want to stay in and look in "under appreciated" areas...maybe not the A class neighborhoods, but ones that have potential of becoming "improved".

While I understand your desire to stay in a particular school district, it's not the end of the world to consider other districts if they will allow you to build real estate/family wealth that will put your entire family tree in a better position.

"The current area we are living in is very expensive and is heavily deed restricted"....sounds like you're currently in a HOT area.  Hard to buy in a hot area and make money, in my opinion.  School district ratings are not all encompassing...they don't measure some things that are important.  If you stay/buy in the expensive/deed restricted area, you know you're going to have some challenges...you might become "house rich and cash poor"....Just something to think about.

Let us know what you decide to do, and how it turns out.  Best to you!