All Forum Posts by: Jason Dumbaugh

Hi Jason! It sounds like you've done a great job setting yourself up for options. If it were me, I'd lean toward selling to take advantage of no capital gains tax and use the equity to fund your next primary residence and maybe a rental that actually cash flows. Holding onto a property with negative cash flow can be risky, especially with your ARM adjusting in a few years. Plus, with your market's rapid development, you could lock in your gains now while the market's strong. Option 1 seems like the safest and most flexible route.

Hey @Jason Dumbaugh,

This is not investment advice just my thoughts:

You're in a strong position with great options! Selling now avoids capital gains tax and lets you reinvest into a new primary home and a solid rental property, which feels like the safer play given the cash flow challenges and ARM timeline. Renting and eating the loss is a gamble on future rent increases, but the market and high costs might not make it worth the stress. Selling seems like the clearest path to maximize profit and flexibility—especially with $100k equity to work with. Best of luck!

Assuming you paid $430k, put down 10% ($43k) so have a loan balance around $387k and $100k in equity means it’s worth $487k. After you sell you’ll probably net $457k? 

That's not a lot of tax savings but it does give you $68k so you can put down 10% on your $650k home. (I'd prefer you found a way to put down 20% and save the PMI as well as lower mortgage origination costs and on going interest costs. But if you don't have it, you don't have it.)

At least you made $25k tax free on your $43k in 2 years. 

 Forget about hoping for rent increases. Your only real question here is how much additional equity can you earn before you sell before the rate resets and before you lose your capital gains exclusion, versus the opportunity costs if you sold and cashed out now. My guess is in that price range and limited window, you will not make enough additional appreciation to make renting it out make sense, so unless you planned on keeping it forever as a rental you are probably best off selling and cashing out.

Agreed with Jonathan. #1 seems ideal. If you could stomach the negative cashflow or get creative holding is not bad. If you have enough funds to go after another primary I would use those towards that and use the proceeds(if you sold) for another property. I think taxes and insurance will continue to go up so keep that in mind

I like number 1 just based on what I read, especially if you can get a new primary and shave off a downpayment for an investment property. Too many people get tied to their real estate, but all assets are tradeable especially when they won't cash flow when you leave them. Even if you decided to do MTR or STR, you would be hustling just to be net positive. I would sell, pat yourself on the back for making good equity, and turn 1 property into 2.