Keep it or sell it, downsizing to new house

[Derek Duplechin]

Hi BP friends! I’m in a bit of a pickle and would like some insight and recommendations. We completed our first flip this year and sold it in late August. We’ve since decided we wanted to downsize our primary residence so we are more than half way through a new construction 3/2. I’m using proceeds from my flip to fund the 20% down on the new primary. My question is do I keep my current primary a 4/2 that is only 6 years old in a growing neighborhood. The opening pricepoint for my model is now 204k(I paid 187k but have also put in about 12k worth of upgrades(fence, flooring, patio etc). I could probably move it fairly quickly for 200-205. I owe about 150 on it. If I kept it as a rental I could maybe fetch 1600 a month, my note is only 1020.00, so it would cash flow nicely but I’m at the very top of the rental market in my area and that concerns me since the renter pool will be small when I have a vacancy. The other option is to sell it and pay a 12k commission out to my agent and put some of the proceeds into a cheaper(120k) rental. Cash flow would be around the same amount monthly as keeping the primary but would offer a larger pool of tenants when vacant. We definitely want to do B/B+ to A grade rentals. If I chose this route I could would be getting a cash flowing property as well a see monthly bill reduction around 640 a month from payoff of my 401k loan and lower primary mortgage. But I have to pay the 12k commission out to get there. I have a 401k loan of 20k I need to pay off from my flip so I think I would need 8 months to save some cash before purchasing another rental. I would be saving the 401k loan payment(440.00) and my new mortgage on the 3/2 would be 200.00 less than my current mortgage. So essentially I could save 640 a month to put towards the 20% down payment on the rental. I hope this wasn’t too confusing. I’m just looking for some input on my thought process, wrong or right and what you would do and why. Thanks everyone!