Converting Primary residence to first rental

[Thomas Bridges]

Hey everyone, I’m looking for some feedback on a move I’m considering.

I currently own my primary residence and my monthly mortgage payment is about $1,550. The problem is that market rent in my neighborhood looks to be around $1,450/month, so if I moved out and turned it into a rental, I’d likely be negative each month before even factoring in maintenance, vacancy, repairs, etc.

My original idea was to keep the house, rent it out, and then buy a duplex as my next primary residence so I could live in one side and rent the other. But now I’m starting to question whether it would make more sense to just sell my current house and start fresh by buying a duplex as my new primary residence.

My main questions are:

1. -Would you keep a primary residence as a rental if it’s likely to be slightly negative cash flow from day one, or would you sell it and move on?
2. -From an investing standpoint, would it be smarter to sell the house now and focus on house hacking a duplex, rather than forcing my first house to become a rental that doesn’t really work on paper?

I’m trying to think long term and build a rental portfolio the right way, but I also don’t want to hold onto a property just because I already own it if it’s going to drag down my cash flow and borrowing power. Curious how others here would look at this.

[Vijay Friedman]

Quote from @Thomas Bridges:

Hey everyone, I’m looking for some feedback on a move I’m considering.

I currently own my primary residence and my monthly mortgage payment is about $1,550. The problem is that market rent in my neighborhood looks to be around $1,450/month, so if I moved out and turned it into a rental, I’d likely be negative each month before even factoring in maintenance, vacancy, repairs, etc.

My original idea was to keep the house, rent it out, and then buy a duplex as my next primary residence so I could live in one side and rent the other. But now I’m starting to question whether it would make more sense to just sell my current house and start fresh by buying a duplex as my new primary residence.

My main questions are:

1. -Would you keep a primary residence as a rental if it’s likely to be slightly negative cash flow from day one, or would you sell it and move on?
2. -From an investing standpoint, would it be smarter to sell the house now and focus on house hacking a duplex, rather than forcing my first house to become a rental that doesn’t really work on paper?

I’m trying to think long term and build a rental portfolio the right way, but I also don’t want to hold onto a property just because I already own it if it’s going to drag down my cash flow and borrowing power. Curious how others here would look at this.

@Thomas Bridges
I'd look beyond the monthly cash flow and consider the bigger picture. If the current home is only slightly negative but has strong appreciation potential, it may still make sense to keep it. On the other hand, if it's going to limit your ability to buy the duplex and grow your portfolio, selling could be the better move. I'd run both scenarios side by side before deciding.