Starter home to second home, do we rent or sell?

[Jake Allen]

Hey, we purchased a fixer upper as our primary in 2017 & have renovated it ever since.  New HVAC, plumbing, electrical, floors, kitchen, baths & added a deck.  It's been great, but our family is growing and could use more space.  The house is a 3/2, built in 1950.  We have a 15 year mortgage with about 7 years left (throwing a bit more on principal each month).  Our payments are around $950 and the local rental rates are near $1500.  We owe around $75k on the loan, but the value is near $250k.  I'm racking my brain, would it be wiser to hold onto our first home & keep it as a rental?  Or sell & throw that money towards our next primary residence?  Ideally avoiding capital gains tax, we've owned it for more than 5 yrs & lived there the whole time.  We've captured a lot of equity over the past few years & I kinda hate to "throw it away" towards another primary residence.  Especially since the market might be turning.  So I guess i'm leaning towards keeping the first property as a rental.  Any advice is appreciated! 

[Ryan Konen]

Holding onto your home as a rental could be wise, given your low mortgage, strong equity, and rental income potential. Renting it out would let you keep the asset, earn some extra cash, and possibly benefit from tax deductions like depreciation. However, if managing a rental doesn’t appeal or if the market conditions favor selling, selling could fund a larger down payment on your next home and keep things simpler. Both options have merit, but renting allows you to keep an appreciating asset while covering costs.

[Julia Lyrberg]

Keeping it as a rental sounds like a solid option, especially with the low mortgage balance and high rental potential. With local rents around $1,500, you’d likely cash flow after covering expenses, and you’ll keep building equity in a property that’s already in great shape. Plus, holding onto it gives you a buffer if the market shifts.