Sell or Rent?

[Brianna H.]

We are looking at buying a new primary home and either renting or selling our current home. What is my best option? Here are the details:

Purchase: $92k

Sell For: $190k

Loan:

-15 year loan (9 years left on loan)

-2.9% interest!

Rent:

-$1700/mo (after all expenses, this would be about break-even point)

-3.6% tax rate (killer), which would be about $500/mo

-2006 home, so everything is still fairly new (no repairs anticipated soon)

-Eventually when we sell, we will pay capital gains (could be $25k with current market price)

Sell:

-$98k in profit - $12k realtor fees ($86k profit + $30k loan paydown)

-Could apply gains towards new primary + potentially 2 new rentals?

I feel like I should sell the house, but I LOVE my house and I need people to talk some sense into me. J

[Rajeev Kotyan]

@Brianna H.: All the questions you ask are all good questions. I would highly recommend that you work with your local financial planner (someone who you like and trust) who incorporates all these real estate scenarios and questions into a larger investment portfolio to see how it applies to your case. Taking into considerations your entire portfolio, including the options of current property as rental or sell the property to acquire 2 rental properties, with and without leverage.

One of the reasons I specify someone local to you, as they would understand the local real estate market and should also be able to analyze where the rental and real estate trends are headed.