Have a 15 year 2.25% on a house near Vancouver , WA. Bought in 2021 summer and currently profit about $130k and total equity about $325k.
Current rental covers for mortgage + escrow and leaves ~$25 excess pm but as it’s a 15 year mortgage yearly principal payment is $22k +.
We have since moved from that location and don’t foresee going there anytime in the next few years (or ever). If I see this year or early next, I get the LTCG exemption as have stayed there for 3 years of the last 5 til date.
We have a primary home in our new location but something that we want to move out of into a nicer property and community. Price of new home will be about $900k. I have sufficient liquidity to pay the 20% down. There will be no loss/ profit in this home as we bought it 1 year back.
New property interest rate projected around 6% for 30 yr mortgage.
Not sure whether we should :
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sell the 1st house , take the equity and invest in new home down payment so have much lesser loan balance.
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sell the 1st house and invest equity in index funds while paying higher mortgage on new house.
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keep renting the 1st property while paying higher mortgage on new house.
Seeking advise from folks here to get your perspective.
Thx
Have a rental property at 2.25% for 15 yr mortgage, should I continue giving it on rent or sell and take equity?
byu/Akai007 inRealEstate
Posted by Akai007
1 Comment
If you can’t rent it for the PITI + 20-25%, it’s not a good rental. Some day you will have to invest quite a bit of money into it, to replace the roof, appliances, flooring, HVAC. Maybe if you figure you’re rapidly paying down the principal it will still make sense, but why pay off a 2.25% loan faster when you could be investing that cash almost anywhere for more return? And if you only plan to hold it a couple more years to get the tax exemption, what’s the point of that? Prices are unlikely to change much in most areas in that time.
Also landlording if you are not local is the riskiest way to do it.
I’d sell and invest elsewhere too much risk, not enough cash flow for me.