My wife and I currently own a 1,850sqft 3/2/2 in Texas. We are planning to buy a newer home this spring, and I'm investigating the possibility of renting our current home out. I'd like some feedback if you folks don't mind..

Here's our information:

Market Value: $140,000-$145,000
Mortgage Balance: $81,000
Rate: 5.875%

Monthly expenses:
Mortgage: $525
Taxes: $250
Insurance: $125
Total: $900
Estimated Rent: $1,250 - $1,350
Cashflow: $350-$450

There are no major maintenance needs. HVAC is less than a year old. WH and DW are 4 years old. Range and oven are older, but work well. No plumbing or electrical issues. The only need is the roof which will probably need to be replaced in about 5 years.

As I see it, we're in excellent standing on this home. Low rate. Lots of equity. Lots of life in the appliances. Good location in a growing city with moderate (2%-3%) but very steady appreciation.

Some background on us:
My wife is a liscensed (but currently inactive) realtor. Her parents and grandparents both have decades of experience in real estate sales and leasing in this market, as well as some expereince building and inspecting. I'm very handy & mechanically inclined. I have an engineering background and a good feel for managing various projects & money. I make a very good income (about $2k surplus per month) and we have little debt ($17k on two vehicles and $5k on a credit card). Our weakness is savings. Until recently, my income wasn't quite as good, we've concentrated on paying off our credit card debt, and we spent quite a bit of money on improving our home. Our savings usually hovers between $1000 and $3000.

BiggerPockets.com has a rental property analyzer that I have used to evaluate properties. I believe you have to sign up as a member but they have some nice reports and show what kind of cashflow, equity, and appreciation you can expect over 1-5 years.

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I Buy Phoenix Houses | We Buy Houses

Sounds like a good money maker. I'd make sure the loan was on a 15-year note though. The goal is to pay it off and then REALLY start making money.

Your numbers are good though. A net profit of $300 a month is $3500 per year which should actually be a "break even" amount. You'll need it to cover vacancy, fixup, advertising, etc. Of course you're roof and A/C will need to be replaced as soon as you move out. LOL

Where are you moving to? How much will it cost? You're biggest problem is that you'll need a lot of cash reserves to be safe. What city are you in?

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What is your question? Are you going to rent it out? Are you trying to sell it? You've forgotten about upkeep (lawn/yard), maintenance and vacancies. You must include both in your cashflow calculations.

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I agree. You need to allow for maintenance and vacancies. It's not realistic to say you'll be 100% rented and spend nothing on maintenance.

We have a what if calculator on our website that lets you play with different scenarios.

http://visulate.com/cgi-bin/invest.cgi

The only thing I would worry about is the low savings rate. I would make sure if the old house was vacant you could carry the new house and the old house for at least 6 months.

If you cant I might sell your old place before buying a new one. Then you could take the gain on the old house and use part of it on a downpayment on a house. And then you could put the rest in the bank to add to your savings.

What part of Texas do you live in? I know Austin pretty well but I am less familiar with the other cities.

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Sorry it’s a dog you would be better of buying something else National 50% of rent is needed for expenses so
$1250/2= $625 $900 mortgage a hit of $275

Here is how I see the property it will take you a month to rent the property 900 dollars at best now you are at 250 a month cash flow put money a side for roof say 100 dollars now you’re at 150 a month cash flow Now add in cost to evict plus you are now paying the mortgage, your time, lawn care, loss of homestead.

Bob

Um, this post is 10 months old I think they've moved on since then

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I'm not Jennifer... I'm Jessie : Panama City Beach Real Estate, Panama City Real Estate and Panama City Beach Condos

That is funny...well, its late and perhaps some of the forum members are having a happy holiday cocktail...

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Susan Zanzonico
Morristown NJ Real Estate
Chatham NJ Real Estate
Summit NJ Real Estate
RE/MAX Properties Unlimited
Morris, Union and Essex County NJ Real Estate

Wow! If you really can get that much rent it's amazing. In our area investors are lucky if they can get 1/2% of the value in rent.

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Leslie Prest
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