I’m working through an analysis for turning my current primary residence (a 1400 sq ft condo) into my first rental property. I currently have a 15 year mortgage and significant equity. My plan is to refinance into a 30 year mortgage and get some of that equity out so I can use it to help fund a house hack. But I’m struggling to calculate cash on cash return for the condo. Do I factor in everything I put into it over the last 5 years? (Down payment, mortgage payments, renovations, maintenance, monthly HOA fee) It seems like this is incorrect... any help would be appreciated!
HOA, utilities, maintenance and all living costs appear to be living expenses you incurred while you were living there so they were just that and not anything impacting rental analysis nor do they add to your equity or future cashflow. for initial investment, I would calculate your down payment and all big renovations made to the unit as your up-front investment cost to help inform your cash on cash return. The remainder would be your expected costs while its in rental use. definitely do the analysis with your 15 year mortgage and the 30 year mortgage to compare for your awareness. Feel free to share the figures on BP for feedback. If they dont look spectacular, sometimes its better to sell than to become a landlord for not much return. hope that helps.