I have 65% equity in my current home, RENT or SELL?

Question

Hi all,

I currently have 65% equity on my current home, my wife and I are buying a new home (closing tomorrow actually) and haven't seen much traction on selling our current house, been on the market for 3wks now and no offers. The house is in the Houston area 12min from downtown and homes are expensive to purchase, but the rent rates I'm seeing aren't near 1% purchase value, nearer 0.5% actually.

Knowing that we are heavy on equity in the home, and have a (in todays numbers) great interest rate of 2.3% on the loan, what is the consensus on selling vs renting?

(we are purchasing a new house regardless of what happens with this one.)

Nathan Gesner · Answer

Crunch the numbers and determine if the home cashflows as a rental. If it does, and if you want to be a Landlord, then I recommend holding it. If it doesn't cashflow, sell it and invest in something that does.

It's impossible to tell you which way to go if we don't know your destination. I don't believe in selling real estate unless you can deploy the capital somewhere that moves you closer to your goal. You need to set a goal first.

Theresa Harris · Answer

Run the actual numbers. Don't use a 'rule' as those are quick checks and don't always work.

Taj Akinbode · Answer

Hi Jacob,

I'm sorry to hear that your current home isn't getting the traction you had hoped for on the market. With 65% equity and a low interest rate of 2.3%, it's understandable that you're considering both selling and renting options. The equity you have in your home and the favorable interest rate on your loan are both huge advantages.

Here are three ideas to potentially help you make a decision:

• Look into the real estate market trends in the subdivision and immediate area where your property is located in Houston, including average days on market and rental rate vs. sales prices of comparable. This can help you determine if renting is a viable option and if it's worth it to wait for a sale. I can help you pull this data
• 
• Consider hiring a professional Realtor like myself to help you market your property, get more eyes on it and find potential buyers. A good Realtor can help you maximize the exposure of your home and negotiate a great deal.
• 
• Really reassess your personal financial goals and timeline. Are you looking to sell quickly and move on, or do you have the ability to wait for a better sale price or hold onto the property as a rental?

If you'd like to explore these ideas in more detail and better narrow down to a few good solutions for your situation, please feel free to schedule a time with me via the link in my signature. I'm here to help and would love to connect with you.

Adam Bartling · Answer

@jacob you have to look at your $$$$ needs. We can not see your financials nor do we know if the house is going to make a good rental ( mortgage to rent price). Obviously you are doing well financially since you can buy a 2nd home. I would also evaluate, what if you sold your home and started passively investing?? I am 42 and I am not looking to manage the property, I rather let my $ work.

All depends on your goals, did you talk to your loan officer? or is he/she only doing home loans?

Scott E. · Answer

I'd find a way to hang onto the home. Sounds like it's in a great area, and you will probably never have the opportunity to borrow at 2.3% again in your lifetime.

It might not cash flow as strong as you'd like but the appreciation should more than make up for this.

If you ever want to tap into the equity, there are some lenders who offer HELOCs on investment properties.

Jacob Lehner · Answer

This may need to be in a different section...

I have 65% equity in my current home, RENT or SELL?

I have 65% equity in my current home, RENT or SELL?

Most Popular Reply

6 Replies