So I purchased a new build home in 2018 for 280k. The plan was for this to be a starter home I would live in for about 5 years. I noticed back in the fall of 2020 that home prices were on the rise and was thinking if I don’t upgrade soon I’m going to get priced out of this area in 2 years when I want to move. So I decided to pull the trigger on a new construction home which was double the size of my current home. The new construction home after customization was about 450k. This new build will be completed in roughly 2 months from now.
Jumping forward to now, the market has gone crazy and I just sold my current house for 525k! Still crazy that I sold my current house which is half the size of my new house for almost 100k more than the cost of my new home. But anyways here lies my question/problem. I owe roughly 240k on my current home, after selling fees and paying off this home I am left with $267k cash in my pocket. Do I take that, and throw most of it on the new build and have that mortgage be sub $200k owed right off the bat, or do I take that $267k cash and purchase a rental property and start renting it out? Or do I split it and take 100k-125k down on my new build and 100k-125k down on a rental property and carry 2 mortgages?
I have been trying to do the math on this factoring in rental property repair costs and maintenance fees and interest accrued over 30 years on both and just got myself turned into a million circles and just looking for a clear breakdown. I am almost 100% positive it is better for me to go the rental property route but if it isn’t significantly better I will probably forgo that option and just pay down my new home a lot. Looking for others opinions and breakdowns on what my strategy should be here. Thanks for the input!
Also, I am setup fairly well already with stocks and 401k and career for the long term and retirement, so thats what makes the decision harder. Yes, I understand the rental property long term is the better play but it would cause me to be a little more money conscious in the here and now where if I paid down my current house and pocketed some of the cash and had a low monthly mortgage I would live a more free and chill financial lifestyle.
TL;DR: Just made 267k profit selling my home, have a new build finishing in August for 450k. Do I put 200k+ down on that home? Do I put 200k+ down or cash buy a rental property? Do I put 100k down on both my home and a rental? What is the best strategy for me in this situation?