Advice On Approach Into Real Estate

[Kirk Graham]

I currently own a home in Minneapolis, MN. I bought it two years ago for $223k (mortgage and PMI is about $1465 per month). My wife and I are looking at investing in Real Estate by buying and renting out Single Family Homes, also in Minneapolis.

Instead of putting 20% down on a new investment property, we are open to moving into a new home (only putting 3% down) and renting out our current house. 

I believe that I could rent our current home out for $2k-$2.2k per month. Our expenses would be the $1465 mortgage plus 10% ($210) for Cap Ex & Repairs, 8% ($168) for Property Management, 5% ($105) for Vacancy. That would leave us with $152 per month Cash Flow. 

While we rent out our house, we would try to purchase something for about $170k and put $30k into it (hopefully get re-appraised at $250k).

Is this a better approach than saving 20% down for a rental property and continuing to live in our current home? Any advice? Do my numbers look good?

Thanks!

[Bruce Runn]

Your property tax would go up when you go from homestead to non homestead so you'd have to cacl that into your formula.