Do large houses not rent out as well?

[Jack B.]

I am looking at buying a house in zip code 98042 but due to the size of the house I'm having trouble finding comparable rentals. It will be my primary residence but when I move from there eventually I want to make sure it's worth it from a rental perspective to be buying the extra space. The house is 3,600 square feet, 5 bedroom 3 bath, newer condition.

While I could still rent it out for a reasonable profit at what the smaller/average sized houses are selling for, ideally I would not put more capital into a house that is necessary for the same cash flow, thus freeing up more money for down the road.

The other alternative is to rent out 2-3 of the rooms while I'm living there, due to the sheer size of the house.

[Dave Foster]

Originally posted by @Joyce Tavares:

When  you're ready to move or sell maybe do a 1031 exchange into a multi-family unit. Just a thought. 

 Nope - That won't work.  1031 exchanges are not allowed on your primary residence.  they are only for investment real estate.  You would actually have more advantageous oportunities from sec 121 which deals with your primary residence.  If you live in it for two years out of the previous 5 year period you could sell it and take the first 250k in profit (500K if married) tax free.  At that point in time you can make a decision to take advantage of the tax free profit and sell and buy another primary residence or some investment real estate.  Or you could convert the property to a rental and as long as you sell within three years of moving out you could still take advantage sec 121.