I have enough money to put down on a second home — I need a slightly bigger place and another bedroom. I currently live in Portland, Ore., but I am planning to move outside of Portland.
However, I’m contemplating whether I should sell or rent the house I currently have. I bought the house for $188,500. I have refinanced twice and got cash out last time. My interest rate is 2.75%, and I still have 18 years to pay it off. I can rent it for $1,800 to $2,000. But I don’t know if this is the best option because I could also sell it for close to $500,000, which is the highest value currently.
It would be great to have the tenants pay my second mortgage, but I don’t know if it’s worth dealing with tenants and repairs they may ask for all the time. After all, it is an old house. What should I do?
Packing up in Portland
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at [email protected]
The completive housing markets has many homeowners considering the very move you’re thinking of making. Homeowners see rising rental rates, and many are taking advantage. In February, rents were nearly 18% higher compared with a year ago nationally, according to real-estate website Apartment List, representing record growth.
To some extent, homeowners are fueling that rent growth by converting their starter homes into rentals. Those homes would have otherwise provided much-needed supply to the home-buying markets. Instead, there are so few homes for sale that many Americans are being forced to rent for longer than they had hoped because they can’t find a property to purchase. More people renting means more competition for rental units, and thus rents are rising.
Just because so many homeowners are going this route doesn’t mean you should though. “It makes sense to convert a home to a rental property if and only if you understand all of the potential issues that exist with becoming a landlord,” said Michelle Gessner, founder and owner of Gessner Wealth Strategies, a financial advisory firm based in Houston.
It’s easy to imagine the benefits of being a landlord — using the extra income to pay off your second mortgage and perhaps once that’s paid off pocketing the money to save for retirement. But if the pandemic has taught …….