Hello,
I will do my best to give as much detail in as succinct of a manner as possible.
1) Bought home 1 in Sep 2013 for $220K w/5% down. (Equal commutes for the wife and me). Most likely stretching our income as it was at the time roughly $87,500 and our mortgage all-in was $1505.
2) Then, we started slowly renting rooms in the house. $400/mo rent as of 1/1/14
3) $1000/mo in rents as of Sep 2014
4) $1500/mo in rents as of May 2015
5) Then, as we/I learned that wife was pregnant, and the further along she got the less likely it was that she would be going back to work anytime soon after the baby, we were somehow able to purchase a second home 6 blocks away from the first. We bought home 2 in Aug 2015 for $164,500 and it came with an $1105 all-in mortgage.
6) We also grew rents to $2040/mo as of Oct 2015.
7) My income grew relatively rapidly from roughly $55,000 in 2013 to $75,000 in 2015.
8) I started a new job in Dec 2015 that pays $80,000 with limited bonus potential. I see income at $82,000. This new job is 30 minutes away with no traffic, and 45-50 minutes away with heavy traffic. I do my best to avoid traffic and get in early and leave late, and then take shorter days on Fridays, but I still don't seem to have enough time with my wife and 5 month old son.
9) The wife intends to start a professional organizing business in April/May when my mom comes back from Arizona (snow-birding as we live in Minnesota). I am unsure of the level of income this business will provide, but I am excited for her and see next to zero start-up costs.
The debate/problem/solution I have/am looking for is:
1) Is there a way to somehow obtain financing to purchase a third home close to my new work location, and then rent out the current second home that we are living in? (be it traditional (highly unlikely w/these DTI ratios) or non-traditional)
2) Do we sell our second home to then buy a new second home closer to work? (The second home we are looking at is priced @ $159,900 and has 2 beds 1 bath, and an unfinished basement. It is 3.1 miles away from my office, and the office has a shower... So, I could bike, run, you name it to work!) (Also, I never did want to ever sell a home in the first place because of realtor fees :( )
* In both of the above scenarios, does it make sense to finish the basement to add another bedroom for the sale price or rental price? (adding an egress window, framing and dry-walling a bedroom, adding drop panel ceiling tile & carpeting)
3) Do we find a place to rent so that we can rent out our current second home? (We have a dog, so that makes it a little tough, although the dog used to be fun, but is a little annoying with the baby at the moment, so we could potentially find a new owner)
4) Do we move in with parents for a short period of time to really sock away cash?
5) Do we stay put and save up money and deal with the commute?
6) Any other ideas you can come up with MMM community?
Current Balance Sheet
Assets: $470,500 ($61,000 currently liquid, although $33,000 is pretax & pre 10% penalty money) *Updated from $439,000 on original post
Debts: $434,000
Thanks for your input. I know it may not look like a great situation, but we have really come along way.