This is a little more complicated than your typical real estate "should I sell or rent" question. It's a long read so strap in.
SELL SCENARIO
In March 2013 I bought my current home for about $130,000 with a FHA loan. It's one story, two car garage, two bedrooms with a den than be converted easily, about 1,400 sq ft. I owe $118,000. Its currently worth $190-200k. If I am conservative with my estimate of $190k, my net equity is about $64k. I live in a hot market, and I'm a Realtor, so my home should sell quickly and would pay less commission, and it might sell for more than $190k, but I prefer being conservative with my estimates.
RENT SCENARIO My mortgage on the home is about $830/mo. I can rent out the home for $1,100-1,200/mo. After I pay a property manager $100/mo, and spend about $50/mo on a home warranty. It will likely rent for $1,200/mo, but for the sake of being conservative, I will say $1,100 thereby netting $120/mo.
At the moment I prefer to rent over sell. Although my monthly gains would be small, I am banking on the market going up in value approximately 8% a year for at least the next few years. It's not unrealistic to think my primary residence will be worth $215-230k in a few years.
BUY NOW OR LATER: THE REAL DILEMMA To complicate matters a little more, I'm buying my brother in law's home. He will sell it to me below market since he's not paying commissions, closing costs, etc. In order for me to buy his home now, I need to sell my home to use the FHA financing. I do not qualify for a conventional loan until November this year. Conventional financing allows me to own both homes simultaneously so I retain an investment property. He will rent his house to me for $1,200/mo until I can buy with conventional. But then I would be netting $120 from my rental and paying out $1,200, in a way losing $1,080/mo for the next 7 months. If I don't buy or rent the home now, he will have to rent it out for 12 months to someone else. He will still sell me the home at the same agreed upon price whether I buy no or later this year.
QUESTIONS/TL;DR So my main question is, is it worth me losing $1,080/mo for ~7 months to get into a second property now considering the market conditions? Is it worth losing a little money this year to gamble that both properties will appreciate in value? Or should I sell my primary residence and move on?
Thanks in advance!
Submitted April 10, 2017 at 12:23PM by BananaHoneySandwich http://ift.tt/2pmdDKR
