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Seeking explanations of options for selling/buying property (lemmy.thewooskeys.com)
submitted 9 months ago by to c/personalfinance@lemmy.ml
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I own a house/land outright (as much as a government will let you own anything): I have no mortgage or liens. For the sake of ease, let's use a nice round number and say that the house is worth $100,000.

I'm interesting in buying a different house/land in another area.

One option would be to use the equity I have in my current house towards the purchase of a second house. I'd end up with 2 houses.

Another option would be to sell my current house and then buy the new house. I'd end up with 1 house.

What are financial advantages and disadvantages of those options? Are there other options?

I appreciate your thoughts and insight.

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[–] 3 points 9 months ago

If you take a loan with your first real estate as collateral, you might lose it if you aren’t able to pay the loan. So in the worst case you lose the old and the new property, if you run into cash flow problems.

Taking out a loan to buy a second property can pay for itself, if you do it right and aren’t unlucky. Live in your old house, take out a loan to buy a second house. Rent out the second property and pay the mortgage with that income.

Owning two properties means you have administrative costs and time you need to put in.

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