We just purchased a new house for $650k, putting 20% down. Our PITI is $4.3k per month. Our household income is $180k. We’re keeping our old house with a PITI of $1k per month, which we expect to rent out for $2.3k per month, netting $1k after expenses. The old house has a value of $350k and we owe $100k on it at 4% interest. We have no other debt, one child in public school with potential $500/month in after-school care costs. Our savings and investments total $400k. Should we sell the old house to reduce the monthly payment on the new one, or try renting it out?
With the rental income netting you $1k per month, you have a good asset that could appreciate over time. As long as you can comfortably manage the new house payment, it might be worth keeping the old house.
@Aza
Just remember, rental income is great until a tenant stops paying.
Living frugally in a high-cost area can be challenging, but it’s doable. We bought a house for $1.2M on a similar income, managed through tight budgeting, and now it’s worth nearly $2M. The key is to cut unnecessary expenses and focus on the long-term gain of property appreciation.
@Vic
Appreciate the reassurance. It’s daunting, but we’re prepared to tighten our belts to make it work.
Your monthly PITI seems high for your income. However, if the rental income is stable, it significantly offsets the cost. Just make sure you have a contingency plan if the rental situation changes.
The net $1k from renting out your old house effectively reduces your monthly expense on the new house. If you can get the rental up and running soon, it should make the financial situation more manageable.
Consider keeping the old house as a rental for at least a year to see how it goes. If it becomes too much of a burden, you can always reconsider and sell later.
Using the rental profits to make extra payments on your new home’s principal could be a wise strategy, helping you reduce interest costs over time without having to sell the old house.
I had a similar experience with managing a rental property while owning a new home. It’s doable with proper management, and the extra income helps a lot.
We have a similar household income and a slightly higher mortgage. It’s been manageable for us without significant lifestyle sacrifices.
It sounds like you’re managing well with your current setup. Keep track of all expenses, and continue evaluating your financial situation regularly to ensure you’re not overextending.
Similar to our situation, we’ve been able to balance the costs so far. It’s about prioritizing expenses and planning for the future. Sounds like you’re on the right track.
Be cautious with tenants. Good screening is crucial to avoid potential issues with non-payment and property damage.
If you’re comfortable with the investment risk, keeping the old house could pay off. Just ensure you’re prepared for any potential tenant issues.
Balancing $4.3k monthly on a $180k salary is doable, especially with the rental income. Consider the long-term benefits of property appreciation.
You’re in a good position, especially with the rental. It might be tight initially, but the potential financial benefits are significant.
Now that the purchase is done, focus on managing your finances to accommodate the new expenses. It’s all about budgeting effectively from here on out.