Considering purchasing new home and renting current. Best financing stragety?

[Jonathan T.]

Hello,

New to REI here and I am considering purchasing a new primary residence while renting out my current home. I am hoping to get some direction on the best strategy for my situation.

Current home in a LA suburb- $700k rough appraisal with 5 years and $116k left on the mortgage @ 3.375%. Other comps rent for about $3500.  If I were to rent this now I would cashflow about $300/mo.

I have been looking for a new primary residence around the 1M range but only have 5% down at the moment but would be able to save the full 20% down in about 3 years. I am afraid of missing out on an appreciating market but also apprehensive of PMI (probably from my Dave Ramsay-esk upbringing on finance)

Gross income $330k, 800+ credit, 0 debt outside of mortgage

Am I better off just waiting until I have full 20% down? Get in with 5% down and eat the PMI? Heloc / Heloan options?

I find myself in an analysis paralysis and would love some perspective. Thanks for your help!

[Stephanie P.]

Quote from @Jonathan T.:

Hello,

New to REI here and I am considering purchasing a new primary residence while renting out my current home. I am hoping to get some direction on the best strategy for my situation.

Current home in a LA suburb- $700k rough appraisal with 5 years and $116k left on the mortgage @ 3.375%. Other comps rent for about $3500.  If I were to rent this now I would cashflow about $300/mo.

I have been looking for a new primary residence around the 1M range but only have 5% down at the moment but would be able to save the full 20% down in about 3 years. I am afraid of missing out on an appreciating market but also apprehensive of PMI (probably from my Dave Ramsay-esk upbringing on finance)

Gross income $330k, 800+ credit, 0 debt outside of mortgage

Am I better off just waiting until I have full 20% down? Get in with 5% down and eat the PMI? Heloc / Heloan options?

I find myself in an analysis paralysis and would love some perspective. Thanks for your help!

 $300 cash flow per month at that loan amount would be wiped out with one month of missed rent.  Sell the property and buy something else with the proceeds.  Also, $300 isn't worth the hassle of being a landlord in a non landlord friendly state.