Refinance, rent and buy second home or sell and buy new home, HELP!

[Loadbearingzipties]

Greetings all!
Long time lurker, first time poster. Until now, I had all of my financial questions answered (thanks to reading a TON on this board). This site has been a tremendous help and has really gotten me on the right path. My case study will be brief as this is purely a real estate/“what would you do?” situation.

Some general stats:

-30 something, married, 2 kids
-single income household
-approx $73k per year salary
-$98k Roth  (all in S&P 500, split between IRA/401k)
-maxing 401k (finally), putting additional windfalls as they arise in IRA
-no debts
-$2k in EF (trying to minimize amount in here in order to put it to work)
-800ish credit score.

The main issue:

I currently own a home that could sell today for $155k. I bought at $145k and after my down payment, financed $129k. My mortgage has $105k remaining at 3.25% on a 15 year schedule. I have gotten a job offer and will be moving. We are looking for homes at around $210k

Do I:
-refinance current mortgage to 30 years, buy a second home and rent the current home (can rent for $1,200 a month). I would not have a down payment on home #2 unless I borrowed against my 401k.
-sell current home, use the $40k as a down payment on the next house and finance the rest of the house at 30years and invest more (max my
And my wife’s IRA)

I know the market generally comes out ahead but since I am maxing my 401K I’m looking to take the next step. Sell current home and buy new home or refinance and rent. I cannot give out too many details but I foresee my current home gaining value as the current area is up and coming. What say you? If more info is needed please let me know! Thanks, this was all typed out in my phone so the format may be wonky (8 year old laptop is acting up!)

[KungfuRabbit]

Depends on a lot of stuff

How far are you moving?  What is the condition of the current home?  Being a landlord is not trivial, especially remotely. You need to look at management costs, repairs, potential damage, months without renters, etc. it's not nearly as simple as "$1200 per month rent".

Personally, unless you intend to use rental properties as a primary income source I'd just sell it and use the capital as a down payment on your next house.  I'm also not a fan of being overleveraged - taking a loan on a 401k and refinancing a property to buy more property is a lot of layers of debt...

[Loadbearingzipties]

I would be approximately 4hrs drive from the “old house”. The old house was built in 2008 and likely wouldn’t need much. We would use a management company but have plenty of friends and trusted neighbors that will alert us to large issues. My gut was leaning towards sell but I wanted to hear all sides. I also see our current house gaining value in the next few years.

[Loadbearingzipties]

I should also clarify that keeping consistent tenants wouldn’t be too difficult as my current coworkers (a large company) would be interested and housing is in demand. On the rare months with no tenants I could forgo the 401k contributions to cover mortgage #1. I suppose I could do a cash option re-if to cover the down payment on house #2

[waltworks]

1. The house isn't a great rental property (though we'd need more details like property taxes, insurance, etc to be sure of that).
2. You have limited resources available to buy another house and would need various financial shenanigans to pull it off.
3. You have no landlording experience - and 4 hours away is a LONG way when you have a job, family, and kids.

Sell the place and stay the course. If you want to look into rental RE in the future, that's great. Being a financially-stressed accidental landlord is not the way to start.

-W

[Loadbearingzipties]

Sounds like all signs point to sell. After reading the replies I thought “would I buy this property (house #1) with the soul intent to rent it out?” No, no I would not. Thanks, I lost my head for a minute thwre