We purchased our first house in Mountain View, CA 94043, in Jan 2018, when the housing market was crazy. And it was not a good deal at all. It costs us $2.4 M with 20% downpayment, 3% interest rate. But soon, we realized that we paid at least 100K above the market value. Besides, as a family without kids, we don't enjoy or need such a big house at all. So we tried all the manners to compensate the loss.
1. Adding values to the house. However, it is a single family house with HOA. There is not allowed to do any structure change.
2. Rent part of the house. The house can be easily split into two parts. So we lived in one side with 1 bedroom, 1 bathroom, kitchen, family room, laundry, garage. And rent out the rest 3b2b on Airbnb with an income about 6000 per month. Util Covid-19, we cannot rent any more. As economics slow down, Airbnb rental might be not as good as before in 1-2 years.
3. Sell it. Last year, we bought an investment property in San Jose. That house was bought at about 1.2M. It already has a even cash flow. And we are in the process of permit application for expansion plus ADU with a hope of more cash flow (might be able to match 1% rule). We really like our second purchase and started to think about selling our first house in order to buy another 2 investment properties. We have talked to a couple of seller agents. Almost all of them estimate the sale price would be about 2.3M. At this price, we will lose (2.4M - 2.3M) + commission fee 5% * 2.3 M = 220K. We paid about 80K principles. So the cash out from the sale will be 2.4M * 20% + 80K - 220 K = 340K.
Questions:
1. Should we sell at huge loss and exchange for an investment property ASAP as a payment for our lesson?
2. Or the only thing we can do is "wait" until the market bounces back? Appreciates 5-10 years later?
All suggestions/discussion are welcome. Thank you!
