Turning private residence into rental property

[Bruce Steinetz]

Hello fellow, investors.
I am trying to help a friend, who is thinking about converting his private residence into a rental because he is moving to a different city. I would like to hear what other investors experience has been in doing this.  He is trying to figure out if it would be better to 1) rent the property to generate cash flow (he has a very low 2.6% interest rate);or 2) to sell the property and take the equity and invest it in a larger project such as a down payment for an apartment complex,or 3) a third option would be to do a cash out refinance to use the considerable equity to use as the down payment for the apartment building while still renting the private residence.(in this last option, there would be far less free cash flow, because of the higher borrowing costs coupled with a higher mortgage Interest rate)

A question he has with option 1  is the mortgage company restricts the loan to owner occupied.  He probably could proceed with at risk that the bank may call the loan.  He would like to know what the likelihood of that option unfolding. Please list any negative consequences that he should be aware of. 

thanks