Updated almost 8 years ago on . Most recent reply
Basis points--converting home to rental
Hello! My name is James and I'm just getting started with rental. I've been talking about it for too long.
We just moved in to a new home and I'm considering converting our old home into a rental. I bought it for $220K and it's worth about $285K. I never purchased it with the intention of turning it into a rental. I ran the numbers with some guestimates using the BP calculator and came out with negative cash flow of $100/mo. I made a couple mistakes in the calculation, but conservatively, I will still either break even or may lose up to $100/mo. The property is currently appreciating so I'm a little apprehensive about selling it.
The bigger question is about basis points. Can someone explain to me what basis points are and what the downside to turning my house into a rental would be wrt basis points?
The other option I have is to sell the place, take the money and put a down payment on a few turnkey properties in another city.
Any insight from your collective wisdom would be sincerely appreciated. I'm happy to answer any other questions you have.
Cheers,
James.