Personal Residence as an Investment (Brooklyn townhome)
Tldr; Should I sell my home that's significantly larger than I need and move into a smaller home?
My place:
I live in a 4 bedroom, 4 full bathroom (4 showers) Brooklyn townhome, with a finished basement and a nice backyard.
I'm a single male and there's no need for so much space. I rarely to never set foot in two of my bedrooms.
Value-wise, I was able to buy in an area that I saw as "truly" up-and-coming in 2016, before other people saw it as up-and-coming. With some foresight and some luck, that analysis panned out and I could now sell my home for almost 50% more than what I purchased it for. I believe that the rapid price increase is over, my neighborhood is now fully on everyone's radar as "a new cheap place with great coffee shops and close Manhattan access that's being developed" and home prices now properly reflect future expectations.
The situation:
The conventional wisdom (which may be correct here) is -- unless you're making a business out of rentals, homes are for living in and not for investing. The expectation is that after upkeep, taxes, etc. etc. etc., your home value will roughly increase with general inflation.
I'm now sitting on a much larger than I need or use. BUT, I do love it here. I have two dogs, we love our backyard and spacious interior with high ceilings, etc. etc. If I were to downsize to a smaller home more fitting for a single guy, because I'm retired with no income, I'd have to do an all-cash purchase and I'd be limited to about a $600,000 purchase .... definitely doable in NYC, but I'd be limited to condos/coops outside of prime Manhattan, and it wouldn't be as nice of a place as I live in now.
The question:
Speaking strictly from an investment perspective, completely emotionally detached from home ownership, does it make more sense for me to 1. stay put, not pay moving/closing costs, and keep paying a ~$4000 3.00% 30-year fixed mortgage (after taxes/insurance), or 2. to sell and purchase a smaller place with the cash difference, greatly reducing my large monthly interest costs.
A couple other potentially relevant factors:
- I COULD see myself using my two spare rooms as AirBnb income someday. NYC has strict requirements for Airbnbs but as an owner who lives on site, I qualify to be an AirBnb host and have even done it a little bit already (but wasn't a huge fan of it). The main reason I haven't is I have two doggos who are not fans of guests and they make it extremely difficult to be a good host, no one likes 30 lb furballs barking at them when they walk in the door. But if I get them proper training or when they pass (they are 8 and 10....cry emoji) I may get back into the hosting game. Obviously this potential income stream goes away if I sell.
- There aren't THAT many townhouses in Brooklyn. As lots are built out into multi-family housing and driverless technology improves, I suspect full homes with yards and quick access to Manhattan might become rarer and rarer. While I'm virtually certain the high rate of increase I've seen in the property value over the past 10 years is over, at the same time, it does seem like this might be a unique gem of a property to continue to hold onto as well. Especially as the surrounding area becomes completely revitalized in the next approximately 5 to 7 years.