Current position:

We bought a house in Manassas, Virginia in 2019 for $290k (single family split-level 3/2 [can be 4/3 once the basement is finished] on 1 acre) -- we bought it as a project house, with a plan to live there for 5 years and renovate gradually. We refinanced to a 30 year mtg at 2.875% about a year after moving in - still owe $280k. We also (unwisely, in retrospect) borrowed $45k to help expedite the renovation, so we 'owe' $345k in total. The market exploded less than a year after we'd been there, and we're astonished at how much equity has gone up, way before our projected timeline.

We are re-examining our initial timeline, and asking ourselves "Should we get out now, and take the equity into other (lower-priced) markets we'd rather be, or would that be 'killing the goose that lays the golden eggs'? We would like to capitalize on current price levels, but we are not yet finished with all the renovations we had intended, but might be able to finish it within 1-3 months if we hire contractors, and hustle.

Goals:

1) Move to a larger property (acreage) somewhere in central or western Virginia to use as our primary residence (out from under the 'mushroom cloud', in the event of WWIII)

2) Build our passive income through rental property

3) Maximize realized gains from rapidly growing equity in current property

Challenges: We currently live in the property, and having been doing most of the renovations ourselves (with permits, inspections, etc.) -- but realize that we might not be able to finish the renovations with enough time to take advantage of higher values.

We've talked with 3 local realtors - two of them have had significantly different opinions for strategy and potential sale value:

A) "If you finish the top-floor renovations, you could probably get $420k for it", to

B) "If you finish the top and bottom floor, we could list it at $480k, and you'd probably get bid-up to near $500"

C) (didn't come prepared with CMA - shooting from the hip) "You could probably get $400k from it, renovated, but that is totally from the hip, I need to do more CMA"

Options we've considered:

1) Expedite the renovation by hiring contractors, to finish top and bottom floor, sell, and put some/all of equity into future primary residence (risks: take our chances with much higher interest rates later in the year, get slammed by higher prices/supply chain issues that suddenly increase costs or delay contractors finishing in time to hit real-estate market selling prime-time)

2) Do a cash-out refinance -- pull out enough equity to renovate to 'rental grade' -- move into a short-term rental to facilitate renting it out (very few comparative rentals in this area - as in, no single family homes for rent within 2 miles from Zillow) -- keep as part of a rental portfolio. (risks: higher interest rates and higher mortgage balance might make it harder to make money on as a rental, if rent prices drop)

3) Finish-top floor renovation, sell, and move into a rental, in the belief that the market will 'crash' -- keep realized gains in higher-liquidity account, counting on there being a market 'correction', and be better-positioned to take advantage of. (risks: inflation -- liquid cash may drop significantly in value, and commodity markets may prove volatile given overseas conflicts)

4) Stay put, stay the course -- keep lower interest rate on mortgage, don't cash-out refi, slowly finish renovation, build capital for another purchase by doing wholesaling as a side-hustle, wait for the market to regain some semblance of sanity (risks: we miss out on higher property values, and lower interest rates -- and instead are faced with paying higher interest rates on with less-valuable dollars, and our options for taking out equity become a little more limited -- we are still 'borrowers' in a market where cash is king)

We also happen to have a friend who would likely let us stay rent-free in their currently vacant home while they are away, through July of this year.

What I'm looking for is input -- is there anything I'm missing? Are there other options we should be considering? Is the 'moment of opportunity' already past? (local news reports home sales are already cooling, with higher interest rates, but prices aren't going down because inventory is still very low).

Welcome your thoughts.

Chesapeake, Virginia

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