Hi all,
first post for me since the intro. DH and I are both retired and in our 50's. We own two homes right now - one in San Jose and the other in Santa Cruz - and are living in both of them, but we plan to move to Santa Cruz permanently once the house there is remodeled. After reading this forum somewhat often over the past several weeks, I concluded that the experts here would recommend we sell the San Jose house rather than rent it out. But like others, we are reluctant to let go of what has been a gold mine for our NW, so lately are having second thoughts.
Here are the particulars: SJ house is in Cambrian neighborhood and Union School District. We are seeing rapid appreciation as our area is popular with tech workers who have been priced out of Cupertino, so our house is worth 900K per Zillow but probably 950K based on comps. Its a 3BR/2.5BA, 1900 square feet, big yard with mountain view BUT its in a PUD and shares one wall and driveway w/neighbor. Rent estimate is about 3200 per Zillow but that may be a little high - my estimate closer to 3000. Our monthly expenses are about 1950 for mortgage, taxes and HOA, and our balance on the 15 yr loan is about 183K, fixed at 2.875%. So if we sold we could walk away with 650 -700K to invest. Capital gains are negligible because we have spent so much on remodeling over the years.
Here is the dilemma: we are pensioners and live very comfortably without dipping into our 457 retirement accounts (about 800K total) but we need about 250K to pay for the addition of a BR and BA and main floor remodel to the Santa Cruz house. (Before delivering a huge face punch for the remodel cost, be aware it was a short sale, worst house in best area; but it definitely needs work, and part of the reason we bought the house in the first place was so we can host our far-flung families for vacations and holidays). We have 3 options to pay for it: sell 457 assets, in which case we must pay income tax on the proceeds, borrow on a HELOC and repay over the next 3-5 years with savings from badassity, or sell the San Jose house and pay cash for the remodel.
What do you think is best? Have I provided enough info for an opinion?