Sell and bank the equity, or keep the first home as a rental and start a portfolio? The decision framework Johnny teaches Colorado sellers.
You bought a starter home, built equity, and now the family is growing, or a job is moving you, or you simply want a different house. Before you hang the for-sale sign, the 0 to 3 question is worth asking: what if this property rented?
Selling hands you cash, tax-free capital gains within limits under current rules, and a clean slate. Keeping it as a rental hands you an asset that pays down its own mortgage while it appreciates, and it funds the down payment on your next home through refinance or rental income later.
Once the potential rent covers the mortgage, taxes, insurance and a maintenance allowance, you have a real decision. Below break-even, the property is a hobby; above it, it is an asset.
Also look at the market: is the neighborhood one where rents grow and tenants stay? What is the vacancy risk? Would the equity do more for you in a down payment today than it will compounding in the property over ten years?
Johnny helps clients build this spreadsheet honestly, then stress-tests it: a month of vacancy, a furnace failure, a property manager. A rental that survives bad months is a rental worth keeping.
Keeping the home only works if you can qualify for the next mortgage with both payments on your record, or with rental income offsetting the old one. That determination happens before you decide, not after you have rented it out and hope.
Because Johnny is both the lender and the landlord in these conversations, you get the two halves of the decision in one call: does the property cash-flow, and can you finance the next one on top of it?
Selling is not failure. It is the right answer when the property does not rent well, when you need the equity for lifestyle or debt, when the landlord job does not fit your season of life, or when moving to the next property works better with a clean sale and a full pre-approval.
The ladder is a framework, not a religion. Johnny's job is to help you see both futures clearly, then pick the one that builds the wealth you actually want.
Colorado mortgage professional, active investor and landlord, and founder of The Real Estate Ladder. He has owned, lost and rebuilt real estate wealth, and now helps Colorado homeowners climb from 0 to 3 properties, one smart mortgage at a time.
An everyday homeowner can move from their first house to three properties. Here is the BUY, BUILD, CONVERT, REPEAT roadmap Johnny Macias teaches Colorado buyers.
Yes, you can keep your current house and buy another one. Here is how Colorado homeowners qualify for a second mortgage while converting the first home into a rental.
When and how Colorado lenders count rental income from your current home when you buy the next one: signed leases, the 75 percent rule, and what to prepare.
This article is the map, not the walk. Bring your numbers and Johnny will show you the route that fits your income, your credit and your goals.
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