double edged sword as I own a townhouse in MD and would like to buy a home in northeast Florida

as I am heading overseas in the spring for 4 months, I met with a realtor yesterday

financially does it make more sense to sell now at the top of the market, but then try to buy in a year when rates come down?

or keep my low 2.9% Mortgage rate and keep renting it out longterm and try to come up with enough cash in a year to buy the second property in Florida.

yes

Based on the info provided I would go for renting.

I'm in a similar market NoVA. Rentals are great place to park money IMHO. With rates increasing, more people looking for rentals. If your home is metro-DC then even better.

MS08 said:

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Keep your low interest rate that we won't see the likes of for 5+ years while continuing to build equity, covering debt and expenses, and surely it throws additional free cash flow off.

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good points

however, everything I am seeing is that home prices are going to drop

so why not sell now at the peak, then buy in Florida in a year or two -

that way it maximizes the sales value of the Maryland property and minimizes the cost of purchasing in 2024 in Florida?

tunefx said:

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Based on the info provided I would go for renting.

I'm in a similar market NoVA. Rentals are great place to park money IMHO. With rates increasing, more people looking for rentals. If your home is metro-DC then even better.

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new townhouse community Germantown MD

TxAG#2011 said:

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LMCane said:

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MS08 said:

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Keep your low interest rate that we won't see the likes of for 5+ years while continuing to build equity, covering debt and expenses, and surely it throws additional free cash flow off.

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good points

however, everything I am seeing is that home prices are going to drop

so why not sell now at the peak, then buy in Florida in a year or two -

that way it maximizes the sales value of the Maryland property and minimizes the cost of purchasing in 2024 in Florida?

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The peak has come and gone.

Are you factoring in selling expenses, buying expenses, storage/relocation?, a massive higher interest rate, and the fact you may not ever get the dip you are hoping for?

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If you sold and factored in commissions and closing costs, what would you walk away with? Compare that to what your residual cash flow would be on a monthly basis if you rent it out after expenses and debt is covered.
How long will you be overseas and what is your plan for mgmt and maintenance? - tenants and toilets can be a major headache, even the littlest of things.

LMCane said:

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tunefx said:

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Based on the info provided I would go for renting.

I'm in a similar market NoVA. Rentals are great place to park money IMHO. With rates increasing, more people looking for rentals. If your home is metro-DC then even better.

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new townhouse community Germantown MD

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Yep, I would try to cash flow that via rental if possible. TH demand is very good due to market conditions. I have a TH rental in NoVA. More than happy to get on phone and walk through possibilities. Look at bottom line.

Rental Income - (Mortgage+Other Expenses+HOA+X)

That's a very simple model. Depreciation and tax impact can be applied as well. I don't take depreciation when property values are aggressively appreciating. But it also depends on timeline one envisions they will sell the property. There are various ROI/IRR models you can use as well. The metro-DC market has been so resilient over time that I do not spend too much time analyzing this. I should probably do a better job.

By resilient I mean stable/increasing demand and rental rates. 31 years as a participant in this market.

TxAG#2011 said:

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LMCane said:

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MS08 said:

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Keep your low interest rate that we won't see the likes of for 5+ years while continuing to build equity, covering debt and expenses, and surely it throws additional free cash flow off.

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good points

however, everything I am seeing is that home prices are going to drop

so why not sell now at the peak, then buy in Florida in a year or two -

that way it maximizes the sales value of the Maryland property and minimizes the cost of purchasing in 2024 in Florida?

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The peak has come and gone.

Are you factoring in selling expenses, buying expenses, storage/relocation?, a massive higher interest rate, and the fact you may not ever get the dip you are hoping for?

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well obviously I am factoring that all in which is why I am asking for advice on this forum

it seems that I can't buy a new place in Florida if I keep my current mortgage in Maryland. so something has to give it's just a question then of timing the market.

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obviously

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Ok, so if you most likely have to sell in order to buy, then it is more of a matter getting a rental plan in place while you are gone. Because, depending on how long your stay is overseas, could not be worth buying until you return any way. That's gives you a season to build more equity, cash flow from the rent some, and I do anticipate interest rates coming down from where they are at now, but you won't see under 3% for long time. We will be back under 6 say this time next year.

The 2.9% mortgage is a really nice asset right now, so I don't think you can sell. I worked overseas for 30 months and it flew by. 4-months will be gone in a flash. I'd rent it out or consider VRBO so you don't have it locked up for 12-months plus.

Fireman said:

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The 2.9% mortgage is a really nice asset right now, so I don't think you can sell. I worked overseas for 30 months and it flew by. 4-months will be gone in a flash. I'd rent it out or consider VRBO so you don't have it locked up for 12-months plus.

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The medium-term rental (2-6 months) might also be an option to consider.