Is My House A Good Rental?

Question

I have thoroughly enjoyed reading the posts on here as I think about getting started in real estate investing. Trying to start with figuring out if my current house would be a good rental for me from a financial standpoint. We are building a new home and I am weighing out if to keep our current house since we don't have to sell it from a financial standpoint.

Our home is worth $310,000 and the mortgage on it is $182k which we just refinanced at 30 year for 2.85%. The payment with taxes and insurance is $1350 a month. I could rent it for $2.3-2.5k a month.

So my question how do I evaluate if keeping the equity tied up in this house is worth the return I'm getting on it. Also, I love the idea of being able to buy and hold some homes in our community. Just not sure if this is the way to start.

Thanks for any insight or recommended resources.

Ryan Kearns · Answer

Thanks Diego! That is helpful. I'll grab that book for sure.

Diego Hodge · Answer

@Ryan Kearns based on the info that you have provided, the rent will cover the debt payment, taxes and insurance and you will also have enough to put up in reserves for any unforeseen repairs or large capital expenditures. After that you may have a reasonable amount of cashflow. With your tenant paying off the mortgage and a considerable amount of equity I think this is a great place for you to start your rental journey. There are a lot of other advantages also. The primary thing that you will have to ask yourself is “Am I ready to be a landlord”. You should read “The Book on Managing Rental Properties...” by @Brandon Turner. It seems that you have a potentially great cash flowing asset but success will boil down to your ability to manage it or delegate the management.