Quote from @Alex Guerrero:
Quote from @Account Closed:
Quote from @Alex Guerrero:
Im 24 and looking to change my future. Im going to be moving but i cant figure out if i should sell my home (which is my first home) or rent it out. After i lose my homestead to rent it out the morgage will be about 1815.44 a month including taxes/escrow, intrest, payment.
I purchased this home at 198,500.00 it is now valued at 232,000 minimum and i owe 186,668.73 remaining on the home.
In short is it best to sell this 2 year old home thats in a developing neighborhood or should I create my first rental with this home?
Alex, first welcome and good on you for looking to build financial freedom!
The answer to your question really depends on several factors. First, what are the rents in the area? Will this rent be enough to cover mortgage, taxes, insurance, capital expenditures, vacancy, saving, and management(if you don’t plan on self managing)? Second, how will this affect your ability to purchase another home? Will your debt to income be too high to purchase? If so, maybe look into buying a small multi family and house hacking (renting out the other units while living in one).
Hope this helps!
replied to you above^ sorry learning to navigate this site.
Hmmm. With negative cashflow, I wouldn’t bank on appreciation. Given that you’ve lived in the home for two years, you should be able to avoid capital gains taxes (check with a tax accountant). I’m thinking your best bet might be to capitalize on your gains and buy in an area with a better price to rent ratio. If you need to look outside of where you live, do so. Check out the book Long Distance Real Estate Investing by @David Greene . He gives a great run down of what to look for and how to manage when you’re not investing in your own backyard.
Though there are factors at play here. What is the current interest rate on your loan? Can you get an interest rate that is comparable (interest rates are rising)? Additionally, the interest rates for an investment tend to be higher.
Even more factors at play! Do you want long term rentals or short term rentals? @Avery Carl has a book Short Term Rental Long Term Wealth. She goes over the different loans you can get as well for short term rentals. I believe you can get a loan for a vacation home with 10% down. You could possibly use the equity from selling this house and buy two or more in different vacation markets. Managing will be different, and it can be more of a hands on investment.
It can depend entirely on what your goals are and how you want to invest.
