Summary: this comparison of options suggests that the best course might be to sell the townhouse and become a nomad renter, i.e., “selling and renting.” This may significantly reduce the (net) monthly housing cost to about $1,250/mo. Selling the townhouse could maximize personal freedom and cash liquidity.
In contrast, “leasing out and renting” might reduce the monthly housing cost slightly more to $1,000/mo., but it would not improve cash liquidity, and landlord duties could limit personal freedom. The disadvantages may outweigh the potential, speculative benefit of $250/mo.
I could stay in the townhouse in the short-term (option 3), while preparing to sell (option 1).
1. Sell the townhouse — (a) rent long-term a smaller hip place, or (b) rent short-term a series of hip places in different places.
conclusion: rental cost of $2,000/mo. (e.g., Archstone SM), with investment income of $750/mo. (4% withdrawal from freed-up equity), for the second lowest housing cost of $1,250/mo. (with a liquid cash cushion).
freed-up equity: liquid cash @ $220K net
future equity: none — no upside gain, but no downside risk either
income: @ $9K/yr. = (4% return * $220K equity out)
liability exposure: none
location: really wide open
mobility: really wide open, with no roots anywhere
2. Lease out the townhouse — and (a) rent long-term a smaller hip place, or (b) rent short-term a series of hip places in different places.
conclusion: rental cost of $2,000/mo. (e.g., Archstone), with net income of $1,000/mo. from leasing out, for the lowest housing cost of $1,000/mo. (with no cash cushion).
freed-up equity: none
future equity: upside gain, but also downside risk
income: $12K/yr. net of taxes = (rental income of $3500/mo. — refinance down to $2,300/mo. — taxes)
liability exposure: some
location: wide open — subject to landlord duties
mobility: wide open — subject to landlord duties
3. Stay in the townhouse.
conclusion: net housing cost is the highest, at $2300/mo. (with no cash cushion)
freed-up equity: none
future equity: upside gain, downside risk
income: none, but refinancing to $2300/mo. might save @ $1000/mo., $12K/yr.
liability exposure: very low
location: good (north of Montana)
mobility: possible, but tied to townhouse