Can I Keep My First House and Buy Another in Oregon?

Stepping Stones: Can I Keep My First House and Buy Another?

At volleyball practice recently, a friend and I got talking about what it would take for her to buy another house.

Would she sell her current home? Could she take out a loan for the next down payment? What if she kept her house and rented it out? Would Airbnb make more sense?

We were technically there to watch our kids. But give two moms some time on the sidelines and we’ll work through a few major life decisions between serves.

I loved her questions because this is a turning point people don’t always realize they can explore. Moving into your next home could also be the beginning of owning an investment property.

Whether that makes sense comes down to the house, the financing, and how much responsibility you want to take with you when you move.

What would selling make possible?

Selling can free up money for your next down payment and remove the responsibility of maintaining two properties.

The number we want is what you might actually walk away with after paying off your mortgage, selling expenses, and any other amounts owed. An estimated sale price is a starting point. It isn’t your next down payment.

I’d also want to know what selling would give you beyond money. A smaller new mortgage? More savings left over? Fewer things to manage?

You don’t have to become a landlord just because you already own a house.

Could you keep it as a long-term rental?

Possibly. And a home you already know can be a useful place to start evaluating an investment.

You know which appliances are getting older. You know what you’ve repaired. You probably know which door requires a little encouragement every winter.

After 18 years in property management, my first question is what the home could realistically rent for. My next question is what would remain after the expenses.

We need to account for the mortgage, property taxes, appropriate insurance, maintenance, larger future repairs, vacancy, and management costs if you hire help. If taxes and insurance are already included in your mortgage payment, we’ll make sure we aren’t counting them twice.

A house in Springfield that rents for more than its mortgage payment might look promising. But the difference isn’t automatically profit. The roof has not agreed to live forever.

There’s also the work of being responsible for someone else’s home. Tenant screening, repairs, Oregon rental requirements, and local rules all deserve a place in the decision.

What about vacation rentals?

Short-term renting can be worth evaluating, but it’s a different business.

Now you’re thinking about furniture, utilities, cleaning, laundry, supplies, booking fees, guest messages, and nights when nobody books. Someone will also need to explain how the thermostat works. Possibly more than once.

For a Eugene property, I’d want income estimates based on a full year, including quieter periods. A busy football weekend is exciting, but we can’t ask it to pay February’s bills.

Before making plans, check the requirements for the property’s exact location, along with any HOA restrictions, mortgage terms, and insurance coverage. Within Eugene city limits, short-term rentals must be registered annually, and lodging tax obligations also need attention.

Eugene’s resources are here:

https://www.eugene-or.gov/3359/Short-Term-Rentals-in-Eugene

https://www.eugene-or.gov/1155/Transient-Lodging-Tax-TLT

And where does the next down payment come from?

This is where I’d bring a lender into the conversation early.

A home equity loan or a home equity line of credit, often called a HELOC, may be an option to discuss. Both involve borrowing against your current home. They add debt, and your home secures that debt.

A cash-out refinance is another possibility to ask about, but it replaces your existing mortgage. That means looking carefully at the new rate, payment, and costs.

Before taking out any loan, tell the lender you intend to move and may rent out the current house. Ask how that affects your options, how the additional debt would affect qualifying for the next mortgage, and whether any projected rental income could count. Don’t assume a rental estimate will be treated the same as established income.

The Federal Trade Commission explains home equity borrowing here:

https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit

I’d also include a tax professional before converting a home to a rental. Rental use and depreciation can affect the tax picture when you eventually sell.

This week’s stepping stone: ask for a side-by-side look at your options.

Start with estimated proceeds from selling, a realistic long-term rental budget, and, if appropriate, a short-term rental budget. A lender would be happy to evaluate the financing alongside those numbers.

Then ask yourself: could I manage both properties during a vacancy or an expensive repair, and would I actually want to?

If you’ve been wondering what to do with your first house, send me a message. We can start by looking at its potential sale value and the information you’ll need to explore keeping it.

No volleyball practice required.

Thinking of you,
Krystal