My husband and I each own a house. We currently live in mine and rent out his townhouse for $1100/month, which covers the mortgage, property tax, and insurance.
Unfortunately he bought his house in 2005 for $165k with $0 down (Two mortgages at 5 year and 7 year fixed, so both are now variable). He'd like to get rid of it, as he doesn't particularly like being a landlord, and it's not profitable. The problem is that it's valued around $90-$100k. Since he's only got about $20k equity in it now, he'll need another $50k or so just to sell it.
I personally think he should just keep renting it out until the market improves, save his money in an investment account that will pay better than the 3.25% interest rates on both his mortgages, and hope to refinance before those variable interest rates rise.
Another option I've considered is trying to sell it, and taking out a Home Equity Loan against my house to pay off whatever the difference is. My mom very generously provided a significant down payment on the house we live in, which I expect to give back to her whenever I sell the house, so I'd be a bit nervous about borrowing against this.
As a last resort option, we could move into the townhouse and rent out my house. As I said, thanks to my very generous mother, my mortgage is very low compared to what it would be if I had just put down 20%. So we could rent out my house for about $500/month more than what I pay for mortgage/insurance/taxes, and put that toward the townhouse. While this sounds like the best financial option, it puts us a bit farther from the places we frequent and adds 4 city miles to my commute one-way.
Thanks in advance for sharing any advice you might have.