A very close friend of mine was recently in your position. He sold his house in early/mid 2006, pocketed a good chunk of $ (he’d owned it for 8 yrs), and had to decide what to do next. He rented back the house he sold for a few months, but when moving day approached, he decided he just did not want to be a renter again. He said his wife looked queasy when they were looking at a rental application on a house they were thinking of leasing. So, he bought in coastal north county. But he drove a hard bargain and made the seller meet a lot of demands, and even squeased the RE agents to make the deal happen. I saw him last weekend and he said sometimes he regrets that he did not rent for another year or two, but the reality for him was that he had school age kids that needed stability, he has pets that were an issue for renting, he did not want to move twice or even more, and he considered his down payment to be ‘house money’ that was simply moved laterally from the first house to the second house. Basically, six in one, half dozen in another. However, he also said that if he was closer to retirement (and moving out if SoCal)he would have viewed the profits from the first house less as simply a ticket into the next family house, and more as retirement funds to be preserved and even arbitraged.
