Need advice on rental property

[Zack Ellard]

Ok I need some advice. I own a house I bought before I married my wife. She already had her own home as well. Long story short, we are living in hers and are fixing mine up to rent. It would be our first rental. Here is dilemma... House is probably worth $135k to 140k. Estimated to rent for $1200 to $1300 a month. It's 4b, 2b 1960 sq ft with a game room/optional 5th bedroom. Mortgage left is $81k with payments of $760 a month which includes principal, interest, property tax, and insurance. We thought about selling and using the equity for a down payment on a duplex to provide us 2 doors instead of 1. Problem is that if I sell, I will lose $6k immediately for a prorated soft second mortgage from the Cherokees. (You have to live in house 10 years not to have to pay anything back) What would you do? Rent or sell?

[Justin Fox]

Rent it until you hit the 10 year mark and then sell.  Not sure how long you've financed the place.  Realistically you're looking at about 200/300 CF per month depending on the rent price.

By the time you take an offer usually 5-10k less than your asking price, pay the realtors ~6% AND the Cherokees, you're looking at a hefty price tag to sell.  

I'm not sure how much of the loan has to be paid off, but can't you refinance the home for ~75% of it's appraised value and get the difference in cash?  Then you'd have a rental property with a note about the same, cashflow and ~20,000 cash on hand to invest into a property down the road.