Sell or rent

[guzzler]

Market Value: 730K
Original Purchase price: 550K
Original Mortgage Amount: 500K
Interest Rate: 2.875%
Mortgage Term: 15 years
Term remaining: 13 years
Amount remaining on mortgage: 385K
Gross Rents: 31200
Principal and Interest (the P&I of your PITI - should match with the above info): 2855 per month: Principal 926$ and 1,928.08 Interest
Taxes and Insurance (the T&I of your PITI):  1.1% taxes (about 7000 per year), 1000$ insurance per year
HOA costs: 90$ per month
Deferred maintenance notes: none


Further details: http://forum.mrmoneymustache.com/real-estate-and-landlording/need-advice-buy-bigger-home-rent-current-or-sell-current/msg371849

[escolegrove]

I read your other post. You have a really hard delma. My only suggestion would be do to the conventional 5% loan for your second house. That would allow you to buy a one million dollar property for 50k. Yes it would mean a higher downpayment and pmi but it would allow you to not sacrifice your stocks. The pmi fall off after 78% of the loan paid off or refinance. If you can cover a higher downpayment out of your monthly budget than that would just mean a few less luxuries until bonuses or raises make up the different.

It would allow you to keep your other rental basket. While it is not a house that many would recommend to "keep" as an investment property it is a great "park" in the market. You are making 900 a month on the principle. Don't forget about depreciation. While you can't take a loss, with your incomes it is another nice legal "income hide" for the IRS.

This will also give you a significant source of "equity" and cash flow for retirement.

 While our personal properties aren't as expensive as yours. We have done well renting them out when we move on. We self manage saving ourself the fee and we have found that our "clientele" has little to no vacancies and lower expense.

Just a thought! Honestly there is no good answer. It is really up too you. Congrats for your wife on the new job. I was just offered my dream job on friday so I understand exactly where she is coming from on not wanting to give it up.

[Another Reader]

A major decision like this one is not dependent on the numbers of the existing house.  There is not enough information provided to have an opinion.  What is your wife's income?  How secure is her new job?  What is your income?  What are your overall expenses?  Are the grandparents going to contribute to the household income or will you reduce/eliminate any costs by having them live with you?  What's the proposed down payment and the source?  Will the bank loan you the money and at what rate?  In other words, what numbers are YOU looking at to make this decision?

[waltworks]

This is an awful rental. Sell it. $2600/mo will not even cover your expenses (vacancy, repairs, taxes, management) - you are losing *at least* $1000/mo even if things go really well.

It sounds like the house you want to live in will either cost $1.5-2 million, or rent for something like $4500. Off the top of my head that seems like a pretty good deal for rent if you can invest at ~5-7% returns while you are saving that mortgage money.

If you never, ever plan to leave the Bay area, maybe buy a place, but I'd still sell the current one.

-W