Hi Chris, This would come down to what your blended rate is factoring both your HELOC and 1st Mortgage rate

I would recommend look at property taxes and insurance costs and factor those into your projected monthly payments.

@Kyle ReynoldsThe decision to rent or sell a Sacramento home is influenced by factors such as projected rent, negative cash flow, and potential appreciation potential.

Lenders will look at factors like:Debt-to-Income Ratio (DTI): Your mortgage payment might be around 30% of your gross monthly income.

Have you factored in tax savings on this?

However, if you’re unsure about future property values due to the unique nature of the property, this could pose more risk.What You May Not Be Considering:Financing Flexibility: Using a HELOC for repairs is a solid plan, but make sure the loan terms are favorable and the rates are manageable over time, especially with interest rates fluctuating.Vacancy and Maintenance Costs: Once all units are rented, factor in potential vacancy periods and ongoing maintenance costs, especially with multiple units.In conclusion, while the repairs are a big expense, the strong rental income potential suggests it could be a good deal if you manage the rehab costs well.

The potential to generate $9k in monthly rent from a $1.2M investment with the lower interest rates and building costs factored in makes for a compelling cash flow model.

An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital isn’t a material income-producing factor.7.

And the fact the new owner of the neighboring property also failed to do due diligence should not factor into your decision to keep, if still allowed by your state laws, what you presumably paid for. 

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