Sell and Buy x 2? Newbie Question

[Siobhan D.]

Hi All,

My husband and I purchased our first home 20 months ago and through either brains or dumb luck it has turned out to be an excellent investiment. It was a foreclosure in a nice area that was listed as being in a neighbouring "less nice" city on the MLS (which I think is why it was not getting any attention). Anywho, it's a raised blungalow that we finshed to have a basement apartment, as well as completely rehabbing most of the house to the tune of $40,000+. We paid $290,000 for the house, got $10,000 added to the mortage for improvements and put 5% down. By next year we should have around $275,000 left on the mortgage and our real estate agent puts the value now around $400,000 (super low inventory in our area, again either brilliant or stupid lucky).

This gives us about $125,000 in equity (if we sell) which is where my question lies. I will post the stats at the bottom of this post (thank you SuperSteveHomes for the amazing calculator) but my thinking is to sell this house, as the cash flow is poor and we can use the equity to get better cash flow somewhere else. I am thinking we would use the equity to put 5% down on a slightly bigger family house for us (with a basement apartment), and then use the vast majority to put 20% down on a 4-plex in a less expensive town within an hour of us. We have already talked to our mortgage broker and we can carry both properties.

Does any of this sound impractical, or is there something I am missing that would be better strategy wise etc? Open to all suggestions/ideas as I'm still new to this. The goal at the moment is to have somewhere nice to live, while also having some passive income streams to compliment our work salaries/pensions in the future. Also if anyone has suggestions on how to grow from there in the future that would be appreciated (I'm thinking use future equity/savings to keep buying properties?)

Thank you, thank you, thank you!

Current House

Proposed 4-Plex

[Brie Schmidt]

@Siobhan D. - Sounds like a good plan to me.  Just be aware of the logistics, I think the 5% down program is only for buyers who do not currently own property.  So you would need to close on the sale first, and then later that day or after buy the new home.

Also double check with your lender but 25% down is required on 2-4 units when you do not occupy them. 20% down is only for SFH that are NOO