Is it worth renting my first home yet?

8 Replies

Good morning my question is, is it worth to rent out my current home yet and should I refinance to make it cash flow better for the long term? I’m looking to move about 30 minutes closer to my work which is in Orlando FL my primary home is in Clermont FL.

Current home purchased at $199800 in 2016 current remaining balance is $169k market rent is about 1600 from what I see online but seems like things are cooling off and rentals are staying on the market longer.

Payment is 1228 a month

Property taxes will be 2250 with homestead for next year I’m assuming it will be much higher after homestead is removed.

Hoa is 420 a year

Insurance is 1100 annual

PMI is $67 a month for about another 2 years

Also should I include when I'm running a rental calculator my initial closing costs or do most people exclude these if they've been living in it for awhile?

Cash flow based off intial purchase in 2016 is is about $120 a month

But if refinance and lower my payment at $169k

Cost about $3000 approximately

Cash flow 215

Doesn’t really seem worth it would take over 2 years to recoup costs

Any advice would be greatly appreciated thanks!

@James Roux what is your interest right now? It might makes sense to refi but only if you have 20% equity allowing you to drop the PMI. It also only makes sense if you plan to hold the home for the next 5-10 years. Otherwise you might look to sell. I am a realtor and inventory in and around Orlando is at a low. So it is still a sellers market. Feel free to send me a direct message if you would like to chat further.

If you were in a multi or in an area where appreciation was guaranteed, you might have a better keep-to-rent option, but I don't see it with these numbers. The property won't do well enough to make it worth keeping. Sell it. Clermont isn't going to be consistent enough to hang onto it.

Originally posted by @Tyler Gibson :

@James Roux what is your interest right now? It might makes sense to refi but only if you have 20% equity allowing you to drop the PMI. It also only makes sense if you plan to hold the home for the next 5-10 years. Otherwise you might look to sell. I am a realtor and inventory in and around Orlando is at a low. So it is still a sellers market. Feel free to send me a direct message if you would like to chat further.

 3.87 rate at the moment if I refinanced rate would be the same right now but I would be able to drop pmi I would plan on holding the rental for 5-10 years or more I want to build a portfolio of rentals all things willing

Originally posted by @Jonathan Greene :

If you were in a multi or in an area where appreciation was guaranteed, you might have a better keep-to-rent option, but I don't see it with these numbers. The property won't do well enough to make it worth keeping. Sell it. Clermont isn't going to be consistent enough to hang onto it.

So what would you recommend doing for my next purchase should we downgrade and get something cheaper in Orlando with the hopes of renting into the future? Plus would be we pull some decently equity out of the house if we sell 

 

It depends on what you value right now. You have to put your family and life first and then figure out your investment strategy. Too many first-time investors are trying to turn static into dynamic. Just because you have a house doesn't mean you should keep it. If you are able to downgrade in size, you may have to anyway to move to Orlando, then you could do that and use any equity to look for an investment property now or later. That 215 cash flow wouldn't last. One thing would break and it would be gone for the whole year.

Originally posted by @James Roux :
Originally posted by @Tyler Gibson:

@James Roux what is your interest right now? It might makes sense to refi but only if you have 20% equity allowing you to drop the PMI. It also only makes sense if you plan to hold the home for the next 5-10 years. Otherwise you might look to sell. I am a realtor and inventory in and around Orlando is at a low. So it is still a sellers market. Feel free to send me a direct message if you would like to chat further.

 3.87 rate at the moment if I refinanced rate would be the same right now but I would be able to drop pmi I would plan on holding the rental for 5-10 years or more I want to build a portfolio of rentals all things willing

 Sounds like refi doesn't make sense. I would look at selling. If you'd like send me a DM and I can help gone you an idea as to what it might sell for and what you could but closer to Orlando.

I would see if you can get your lender to drop the PMI is you have 20% equity in it. Based on when you purchased, I would guess you do. You can accomplish that without doing a refi and they most it will cost you is an appraisal. Give your lender a call.

If you would like to live closer to Orlando, I would rent and find a new primary residence in the area you want to live in. Then you can take advantage of the current low rates for a primary residence and live where you want. 

Let me know if you would like me to comp out your home and see if you have 20%. 

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