Rent out primary and move into free apartment

Rent out primary and move into free apartment

Member since 2021 · 240 posts · 300 votes

I'm just writing this because I'm getting excited it may be about to happen. I'm not sure how calculations would work on this: essentially I may be getting a free apartment through my job. I just pay utilities.

My current house is in a great neighborhood, just a flood zone. PITI is about $1200 per month. Met with a property manager today, I manage my only other single rental myself, figured I give her a try. She's going to get together some suggestions on what to upgrade to maximize rent. Expected rent to be $1900-2100 a month. PM takes 10%.

So to me that's $1700 - maintenance, a month more than I have now. Not sure how that calculates as a normal rental where you could just subtract rent from expenses and set aside some for maintenance, because the act of renting it out allows me the zero rent at the apartment. So it doesn't need to be cash flowing on paper to be net cash flowing for my wallet. Worth a try anyways. I'm single right now so I don't need the extra bedrooms (4) and big yard. Figure I could do some downsizing for a year or 3 and save up some good money.

Thanks for listening.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Account Closed:

Go run it through the BiggerPockets calculator. It sounds like a winner, but it's nice to confirm and see what your profits will be.

If you're wise, you'll take every penny it earns and create a reserve fund to handle vacancies, maintenance, capital expenditures, etc. Once you have a sufficient reserve (6 months of rent would be my estimate), then you can continue saving up the income to prepare for your next investment. Don't spend a dime of it. Save up and keep investing. You'll be amazed at how quickly it can grow.

The DIY Landlord Book4.7248 Reviews
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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    If it pencils out, it's a good move! Remember we are in this for one reason - To. Make. Money.

    That's a down payment on a house.....

  • Joe FunariBusiness Member
    Real Estate Agent · Keller, TX · Member since 2017 · 850 posts · 825 votes
    4y

    @Account Closed Definitely pull the trigger on making the move into a free rental and leasing out your current home. I always recommend to my clients to pull the trigger on a rental if they can net $200 to $300 per month after PITI + management fees. So this is a no brainier. If down the road you decide that being a REI isnt for you then you can always move back into your home. Regarding maintenance I would recommend keeping in reserve $2K to $3K per annum for maintenance expenses. Some years may be higher. Others, lower. But this numbers seems to balance out over time. But trust me. Once you have a rental property they are like Lays potato chips. You can't have just one! Fortune favors the bold. So pull the trigger on this one.

  • Rental Property Investor · Ocean Springs, MS · Member since 2022 · 349 posts · 301 votes
    4y

    Looks like you will cash flow at least $200 a month after factoring cap. ex. and other expenses. If you have already furnished the home and are staying local, an STR might be another option to consider for bumping that cash flow up a bit.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Account Closed:

    Go run it through the BiggerPockets calculator. It sounds like a winner, but it's nice to confirm and see what your profits will be.

    If you're wise, you'll take every penny it earns and create a reserve fund to handle vacancies, maintenance, capital expenditures, etc. Once you have a sufficient reserve (6 months of rent would be my estimate), then you can continue saving up the income to prepare for your next investment. Don't spend a dime of it. Save up and keep investing. You'll be amazed at how quickly it can grow.

    The DIY Landlord Book4.7248 Reviews
  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    4y

    Sounds like an excellent opportunity to jump at! Congrats! Happy investing! 

    RentWerx Property Management4.73300 Reviews
  • Accountant · Edina, MN · Member since 2020 · 172 posts · 97 votes
    4y
    Quote from @Joel Case:

    Looks like you will cash flow at least $200 a month after factoring cap. ex. and other expenses. If you have already furnished the home and are staying local, an STR might be another option to consider for bumping that cash flow up a bit.

    And tax benefits of owning STR! Great insights

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