Should we sell our SF rental property to pay down primary residence mortgage?

Should we sell our SF rental property to pay down primary residence mortgage?
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We are upside down on our primary residence mortgage by ~15k and it’s a more expensive home than we should be in. We also own a SF rental with probably $50k equity, a fixed-low-rate loan, positive pre-tax cash flow of about $200/mo and exceptional rental history. Should we consider selling the rental to be able to “afford” selling the primary and have some leftover to start re-saving for a next (more reasonable) primary residence?

I hate to give up the rental because it’s more than paying for itself. But I feel like we’ll just be treading water until we can get out from under our primary residence mortgage(s).


First of all, you should know the ROI (Return on Investment) of your rental. Just because it is cash-flowing by $200/mo doesn't mean it is a wise investment because you are dealing with debt payment, which can be manipulated. Don't confuse cash flow with investment income. If the property is rising in value along with making you money, include that in your calculation. This is what you would do if you had the same amount of money invested in the stock market - account for both the income (dividends and capital gains) and the growth in value. Knowing this number will help you make an informed decision about the rental because I sense, otherwise, there is an emotional tie to it and emotions don't belong in business decisions.

Second, the issue with your house is a separate problem from the rental house question. Whether or not you sell the rental will not change the fact that you live in a house that is too expensive and the value has gone down, not up. You need to cut your losses, sell, and buy a property that is more affordable and also has the potential to increase in value.

Good luck and I hope this helps!


You can also check out the Home Affordable programs that may be available to you to get a loan modification on your current home.  Visit with an NFCC HUD certified housing counselor to explore this option.  You can also look at your loan servicer's website for information on applying for a loan modification.  Payments can sometimes be adjusted according to income and in some cases the principal balance can be reduced. It is worth checking out. You can get more information at 


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