Hi All,
I have been a long time lurker on this forum and need some advise.
We live in the Bay Area, CA and recently (2 years back) bought a new SFH for 2.2M. The loan amount on this new home is 1.6M at 2.5% for 10/1 ARM (resets in 2032). Our previous home was a townhome which we rented out 2 years back when we moved out of that home to this new SFH.
Previous house:
Current value: 1.25M
Mortgage: 500K
Interest: 2.4% for 30 year (27 more years remaining)
Payment: 3400 (including PITI)
Rent: 3650
The townhome is in great area, always in rental demand and great school district.
Me (45 M) and My spouse (41 F) have House hold income of $600K annually. Two kids - both school going. Currently, we are able to afford monthly payments for the new house and are comfortable keeping the townhome while it is rented. However, since our primary home has high loan remaining, we are heavily reliant on townhome equity to pay off the mortgage over next 10-20 years.
Our current NW including the primary home is 3M with 1.4M (real estate) and 1.6M (taxable and tax-deferred savings stocks). We also have two other investment properties in LCOL which also cash flow at about 1K per month. I am aware of pain of being a landlord but don't mind the effort.
In order to claim the 500K capital gain deduction for primary home, we have to sell the townhome within next 12 months.
Pros of selling townhome:
• Get 700K equity out and invest in index funds. Basically, cash out so we can pay off the primary home loan when needed.
• Our 10/1 ARM for new SFH resets in 2032, and likely need to pay off some mortgage at that time (will need this home equity then).
• Townhome does not appreciate much as compared to SFH
Cons of selling townhome:
• Rent covers all expenses and pays off 1200 per month of principal - home is on auto pilot at this time
• Current tenant is very good long term tenant, and would not mind staying few more years
• Hate to give up on the current low 2.4% rate
• Bay area has always seen decent appreciation - rents are also increasing.
I have been a long time lurker on this forum and need some advise.
We live in the Bay Area, CA and recently (2 years back) bought a new SFH for 2.2M. The loan amount on this new home is 1.6M at 2.5% for 10/1 ARM (resets in 2032). Our previous home was a townhome which we rented out 2 years back when we moved out of that home to this new SFH.
Previous house:
Current value: 1.25M
Mortgage: 500K
Interest: 2.4% for 30 year (27 more years remaining)
Payment: 3400 (including PITI)
Rent: 3650
The townhome is in great area, always in rental demand and great school district.
Me (45 M) and My spouse (41 F) have House hold income of $600K annually. Two kids - both school going. Currently, we are able to afford monthly payments for the new house and are comfortable keeping the townhome while it is rented. However, since our primary home has high loan remaining, we are heavily reliant on townhome equity to pay off the mortgage over next 10-20 years.
Our current NW including the primary home is 3M with 1.4M (real estate) and 1.6M (taxable and tax-deferred savings stocks). We also have two other investment properties in LCOL which also cash flow at about 1K per month. I am aware of pain of being a landlord but don't mind the effort.
In order to claim the 500K capital gain deduction for primary home, we have to sell the townhome within next 12 months.
Pros of selling townhome:
• Get 700K equity out and invest in index funds. Basically, cash out so we can pay off the primary home loan when needed.
• Our 10/1 ARM for new SFH resets in 2032, and likely need to pay off some mortgage at that time (will need this home equity then).
• Townhome does not appreciate much as compared to SFH
Cons of selling townhome:
• Rent covers all expenses and pays off 1200 per month of principal - home is on auto pilot at this time
• Current tenant is very good long term tenant, and would not mind staying few more years
• Hate to give up on the current low 2.4% rate
• Bay area has always seen decent appreciation - rents are also increasing.
Statistics: Posted by BuyorSellBA — Sat Jan 27, 2024 5:33 pm — Replies 6 — Views 458