The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: getmoneyeatpizza on April 14, 2020, 03:16:21 PM
-
We are outgrowing our house (purchased 230k valued $310k now) and want to decide whether to rent it or sell it if we find another suitable house. We are in no rush but if something great comes on the market in dream location then we want to jump on it. We are ok waiting but it would be nice if we could do this in about 2 years.
If we rent it (it would likely rent for 2k a month, not meeting 1% rule, we are near a university and downtown there is almost no risk of this not renting - unless there are no jobs or students...), I don't have enough for a 20% down payment on the next house (80k down probably 400k house). If we sell I have plenty of equity ($80k). We also may want to just be able to jump on the dream house quickly and not worry about waiting for our current house to sell (given current conditions it should sell fast).
I have a brokerage account with 30k. About 75% stock / 25% bond mix that has about 22k in VSTAX and maybe 8k bonds.
I have about 20k in cash as well.
My question is whether to just leave that stock where it is or sell it for cash and wait. I guess it is a question of timing too, if the market turns down and housing frees up, we may have to just rent our house for a year or two until we could get a better price.
Our housing market seems to be staying hot even in pandemic.
So what to do now?
1) Do nothing and qualify for a big loan and don't put 20% down
2) sell some stock, bonds, and save and wait with more cash on hand bc pandemic planning to put 20% down
3) just rent a couple years to wait it out and then refi with more cash to get rid of PMI?
4) something else?
I probably didn't answer all the questions here, so I can quickly follow up if I left something out.
-
Do not rent that house. If you buy something else, sell it. It’s not a good rental. That equity is better used somewhere else.
Also, I don’t really care if I had to take on a loan with PMI. You can always get it waived after you get to 80/20, either through capital improvements, paying down the principle, or appreciation.
I wouldn’t sell anything from your brokerage account for this either. Let that ride.
Sent from my iPhone using Tapatalk
-
Um, the stock market IS down right now. So..Do Not Sell your investments. Period.
You don’t have enough cash to do 2 loans - and there is no reason to take that risk. Paying on 2 loans with 2 property tax/insurance bills, 2 sets of utility bills, and 2 sets of repairs/upkeep is Not a desirable position.
You said you’re not in a rush, so don’t rush. Clean up your current house, save some extra cash to facilitate the upcoming move...Go in order:
Step 1. Sell current house. The market is “paused” in some areas.
Step 2. Buy next house.
-
Thanks. to clarify a couple of points.
1) The mortage is $1300 and i could rent it for $2000 so hopefully thats not too bad
2) I wouldnt need to rent it forever, maybe for just 1 or 2 years while the market turned around / if it goes down.
3) There simply not enough inventory to sell our current house and then start looking for other houses. We have to do the opposite, if, while we look over the next 2 years a good house comes up we'll have to jump on it right away.
-
If you are inclined to move, I would shoot for putting less down. I don't think anyone would vote for selling equities right now. Mortgages rates are low, so having a larger one (plus mortgage insurance) is not a bad option. I wouldn't sell your house as the buyer market is low with the lack of open houses and uncertainty in employment in the near term.