Please assess my situation with advice for strategy forward?

[Account Closed]

Home 1 - rented at $2k/mo, 15yr mortgage is $1700/mo, estimated value is $275k with $170k left on mortgage. 2600 sq ft right outside of downtown. Older house but fully renovated in 2016 besides plumbing (I need to check on plumbing health).

Home 2 - We are occupying costing us $1700/mo, estimated value is $315k with $250k left on the 30yr mortgage. New construction in 2017 and low maintenance. 1100 sq ft downtown but probably big enough for 1 kid coming soon.

Our family is growing so we are considering everything - selling all and upgrading slightly, buying a slightly upgraded third and keeping the others and everything in between like: selling Home 1, renting Home 2, and buying a new home.

We live in the RDU area which has seen great growth since we first bought Home 1 in 2015 for $7k down (FHA). That has turned into almost $100k now in equity. During that time, we also had my brother live with us, so we were also paying below market rent.

I'm also a little worried about a possible recession upcoming and the market slowing down. So, we could lock in our profit on Home 1 and sell but then we're paying capital gains on top of realtor fees. I know the cash flow isn't great on Home 1, but because its a 15yr loan, we are also essentially "saving" $1k/mo in equity on the payment.

There are so many ways to think about this situation and possible ways forward. I want to stay smart and objective and avoid ending up like everyone else in $500k houses with 30 yr loans but of course there are risks to what we're doing (and headaches with landlording). Part of me likes the idea of putting Home 1 and 2 with a prop mgmt company and buying a 3rd, but that's also adding even more risk.

Our cash situation is fine. I guess I just want to make sure we're staying on a good route and not making any mistakes undoing any of the work we've done (like selling Home 2 after only living in it for 2 years)

Is there any obvious answer/advice to this situation or better way to think about it? It can be hard to stay 100% objective when you're deep in it.

[Ryan Daigle]

@Account Closed I'm new to this game and have basically zero experience, but I did stay at a Holiday Inn Express last night so....

I've been doing a bunch of research on the long term population and economic trends of all the major metro areas and I have to say that Raleigh's profile is stellar. Just years and years of steady growth with no signs of slowing down. If I were you I would be looking to maintain the properties I had here to take advantage of the long term prospects of the area. Even if we see a slowdown in the coming years this area's dip will be much smaller than most and our rebound much quicker. So, if you're on board so far I would say the goal would be to maximize the cash flow on both properties as rentals so you can hold onto them with little risk.

For home #1 since it has good equity and a short term mortgage, what if you refinanced to a 30yr to bring your monthly payment down closer to $1k/month? That should give you plenty of cash-flow breathing room and let you keep the property and better weather any economic bumps.

Then, for home #2, it sounds like it might be a desirable home in a cool part of Raleigh (downtown)? If so, I think it would be interesting to consider it as a short term rental (AirBnB). Even though your mortgage payment is higher on this home, the location and size seem like it would be a great AirBnB which would get you the cash flow you need to support the mortgage.

Just some thoughts!