I’m looking for perspectives I might be missing. I have a financial advisor and won’t make any decisions without consulting him. But I am looking for some other perspectives/insights here.
Background:
I bought a two-family home in 2008 (bottom of the market) when my now-wife and I decided to move in together. It’s a ~100-year-old fixer-upper in a coastal town about 25 minutes from a major metro area. We lived in the smaller unit and spent several years reinvesting into the property, especially renovating the larger unit. Eventually we moved into that unit and rented the other.
Today, we have three kids and own a single-family home elsewhere in town. The two-family is now a rental that nets about $2,500/month after the mortgage. Property values rose significantly after 2011, and the home has roughly tripled in value, so we have substantial equity. We’ve had good luck with tenants, and I handle much of the maintenance myself.
Current situation:
Our primary home (130 years old) is awesome, but needs work. The kitchen is failing, and there are exterior issues (gutters, fascia, etc.) and some other stuff you expect with a house of this age. Nothing critical (I've already taken care of those!) but a lot of smaller things here and there add up: some windows need replacing. Garage doors are the original carriage doors and falling apart. The front porch decking will need replacement soon. etc. Overall, sometimes I feel it’s the most run-down house in an otherwise nice neighborhood.
The question:
I’m considering selling the rental, which would likely net us around $600K. That would relieve a lot of stress and allow us to fully renovate our current home, with additional funds to reinvest or pay down the other mortgage.
The tradeoff is losing a strong income stream, especially as we approach retirement (about 10 years out). I’m weighing the value of improving our quality of life now versus maintaining that future income.
We both have retirement savings and expect to be okay long-term, but I keep coming back to the question: when no one knows what the future will bring, is it better to optimize for quality of life today or for a more secure retirement later?