Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
General Real Estate Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 8 years ago, 05/13/2016

User Stats

12
Posts
1
Votes
Brian Beck
  • Dublin, CA
1
Votes |
12
Posts

Rent or sell current primary residence in SF Bay Area

Brian Beck
  • Dublin, CA
Posted

Hello,

I hope what I'm about to write is clear. 

Step 1)

Our 3-5 year plan move from California to Tennessee and in the meantime move back in with my mother and rent out our home (comparables rent for $3,000 and our new mortgage is $1,870). While living with my mother, we would get her house ready to sell or rent (needs major cleanout).  We purchased our home in 2011 for $335K.  Refinanced to a 15 year FRM in 2014 (got $70K cash out) and remodeled kitchen, added a back deck, installed French doors and replaced windows.  We are currently refinancing back to a 30 year FRM, and the house is now worth $660K.  

Step 2)

Sell our home (netting $400K or so) use profits to purchase land / house for less than $120K and use remaining funds to invest in rentals to become financially independent within ten years. Moreover, we would sell or rent my mother's house (valued at $270K rent for $1,700) and she would live with us.

So, I have a few questions:

1) If we rent our house for more than three years (triggering the capital gains tax) will we be taxed on the capital gains based on the original purchase price ($335K) or the value of the home when we start renting it ($660K)? 

2) Using the BP rental calculator it said, we would have a cash flow of $325.  Does this sound right?  I know I'll need to budget for repairs and expenses but $800 a month in expenses seems excessive.  But, I only just started learning about real estate investing this week, so I know little to nothing.

3) Assuming that we sell the home and net a few hundred thousand dollars, would it make sense to purchase rental properties outright or make down payments and mortgage the rest?

Thank you for taking the time to read my long post and for any advice you might provide.

Loading replies...