Need your input

[Rahul Singh]

Hello Everyone,

I need your input on a decision that I'm struggling with.  We were able to get a great deal on our current primary residence back in 2009.  Initially we bought it to flip it but after renovating and marketing being dry, we decided to use it as our primary residence.  It's great home and in very central location in the bay area.  We can easily rent it out and have great cash flow.  The only issue is our school district is not the greatest so we are having send our kids to private school.  With our younger child also starting school this year, our mortgage and their tuition would be about the same now.

We also have good amount of equity in our home but I'm struggling with what to do.  Our choices are:

-Rent our home and rent in a better neighborhood with great schools.  We would be saving about 75% on our kids tuition.  Another benefit is we would be living in our desired neighborhood.

-Sell our home.  Put our equity down using 1030 exchange to maximize our gains.  Purchase a home in the neighborhood where we want to be.  Our mortgage would most likely be more than our current mortgage and kids school expenses combined.  But I guess there would be some tax benefits of it?

-Sell our home and invest the equity in a business that would generate passive income.  Rent in the neighborhood that we desire.  

My key concerns are 

-it's buyers real estate market in our area.

-I have a feeling that we are going to have another another real estate bubble pop at least in our area given how quickly the prices are rising based on the past corrective real estate cycles.  Not to mention unemployment rate being 4.4% in our area well below 7.3% state wide.  It will rise leading to some financial setback for some folks.

Given the concerns of real estate bubble, I like the idea of selling my home at a premium now in the sub-par neighborhood and purchasing a home in a great neighborhood which will be less like to see a large dip as historically seen here as well.

Please share your thoughts and opinions.  Your input is much appreciated.

Thank you!