Sell our home or invest in it?

Question

Hello,

I'm new in the forum, want to start investing in Real Estate. I have a question on what would be the best approach to invest. We have a big house in a growing area in Orlando, FL. Paying out mortgage is not that easy, we are considering in selling our home to buy a smaller one, but this area in under development, so I know our house will appraise more in the next few years. We barely make it to pay everything, we have no extra money to invest. So, if we buy a smaller house we will be more comfortable making the mortgage payments and have some money to invest. But, I was thinking also what could we do and make our big house an investment property. I know is going to be super difficult to rent to a single family due to the price and we cannot afford to have any vacancy nor losses. Any ideas, what should we do?

Thanks;

Diana Alimi · Answer

Hi Marvin,

Since your area is already developing I'm sure you have some equity in your home already so you will profit from selling your house now.. If you want to start investing in real estate and be able to more comfortably afford your monthly mortgage payments my suggestion would be to sell your house and purchase a multi family property anywhere from 2-4 units. This way you could live in a unit and rent the rest out. It would solve your issue of cutting it close with bills every month and you would get right into investing.

Thomas S. · Answer

When you own a home you can not comfortably afford the only option is to sell. If you do not sell before a financial bump in though road occurs it will be too late and you will likely lose it all.

Antoine Martel · Answer

Marvin.

I think that selling your house and moving to a house where you can afford the payments is a smart move.

That will allow you to save you cash which then you can invest that cash into assets that will produce cash flow for you.

Your personal residence is not an asset. It's a liability!

Account Closed · Answer

I sold a home I had lived in for many years that had appreciated in price.  I was able to exclude much of the capital gain from taxation due to the personal residence exclusion (https://www.irs.gov/taxtopics/tc701).

I moved to an area with a lower cost of living and am renting while I assess my opportunities for buying a smaller home at a lower price.  In theory, I could have fixed up my previous home and rented it out.  But I've never been a landlord before and didn't want to make the newbie mistakes with my accumulated home equity (which is in a different state from where I'm living now).  Previous home equity in the form is cash provides me with alternatives, including remaining a renter if that's what I decide to do.

Account Closed · Answer

Any update? I'd concur with a few others on here and say sell while the market's up. If the house is as big as I'm picturing you could get a nice triplex or even a quadplex, go as big as you can, and live in a unit. Sell!

Chris Grenier · Answer

Did you end up selling @Marvin Perez?

Marvin Perez · Answer

Thanks everyone for your inputs, I really appreciate your comments. I think we will sell our house as suggested.

Jorge De Jesus · Answer

Take a good, long , hard look at your DAILY expenses...then minimize them. If you are STILL struggling after getting rid of the car payment, the Starbucks habit and the landscaper SELL.

Otherwise, get with an agent and have them answer the question of whether you can or cannot feasibily Rent this out at a profit or very least break even. This way the mortgage is being paid down for you AND you can make a play at the appreciation you seem very sure of. I’m not one to speculate but to each their own.

Look into the equity you have in this home and get informed (i.e. post another question) about how to use it to potentially downsize. Best case scenario you downsize into a duplex or triplex and live “rent free” in one of the units.

I don’t know your market BUT the biggest risk I’ve ever seen anyone take is NOT taking any

John Acheson · Answer

Marvin, I think it's a perfect time to sell with the recent stock market volatility we might be at or near the top. Even so nobody can predict the exact top of the market but we are so close that I would say SELL SELL SELL. List it high and if you don't get an offer that you like you can always delist it too. Brokers only charge you if the deal closes so listing it is no risk. And if you do close and have a gain and it's your primary home I'm sure you're aware of both the $500K married couple exclusion to pay no taxes and/or the new tax laws that lowered income taxes. It's a great time to sell, John

Sell our home or invest in it?

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