Putting home for rent and buy a new one?

Question

Would you recommend putting your current home for rent (Interest rate is at 2.9%) to get some cash flow and buy something more expensive at the current interest rate to start on real estate?

Carlos Valencia · Answer

I would Rent it out especially if it will cash flow. This is a good test run to see experience the landlord life to see if its something you enjoy doing. If you do but eventually want more time for yourself you can hire a property management company to handle all your future rentals. Definitely try it out wait and see how your experience is and if you like it then start thinking about your next investment property to continue growing your Real Estate portfolio.

@Albert Bui @Matthew Kwan

Matthew Kwan · Answer

Do you value more on cashflow or appreciation? Will you be able to rent out your current primary, and still being able to purchase your next primary house. If yes, you will be able to use your current rental income from your primary that you're moving out at 75%. This will allow you to offset and increase your borrowing power.

@Albert Bui

@Albert Bui @Carlos Valencia

Josh Young · Answer

@Gloria De la Fuente

Go for it! But don't do a month to month lease, go for the 12 month lease. Get the house clean, take great photos, write a detailed description of the property and lease terms for the listing, price comparable properties on Zillow, pick the median price, not the max, if you price it too high you will get unqualified applicants, then list it on Zillow Rental Manager. Reply to every inquiry, but make people apply through Zillow, so you can view their Credit Report, Background Check, and Income. The key is to attract a great tenant that is over qualified, I like 700+ credit score, clear background check and income 4x rent. I use Zillow for payments too, it's easy and free. Good luck!

Your new purchase will have a mortgage payment that is much higher than market rent, but in a couple years you will be able to refinance and rents will continue to increase over time, so you will be able to do it again at that point, just make sure you have a least 6+ months of reserves.

Here is a post I did about how I kept my house as a rental, then did it again. https://www.biggerpockets.com/...

Jared Hottle · Answer

I think if you are interested in becoming a landlord or want to try this would be a low stakes way to do it. Sign a month to month lease and if it does not go well or you do not like it. You can always sell the house. Also want to check with a lender and make sure your debt to income will support 2 house purchases.

Gloria De la Fuente · Answer

Thank You Josh! This is great information for me!! I didn't know you could see all that through Zillow.

Gloria De la Fuente · Answer

Yes, I would like to become a landlord! I like the idea of short lease contract to see if I like it or not. We started by asking our bank about the process of getting the loan and it seems we'll be fine with them, but we'll keep exploring options.

Thanks for the reply!

Gloria De la Fuente · Answer

Yes, I would like to become a landlord :)

Charles Carillo · Answer

@Gloria De la Fuente

Do you actually want to become a landlord, or just really don't want to lose your low-interest rate? Many people are keeping properties they don't want now because of their low-interest rates.

Putting home for rent and buy a new one?

Putting home for rent and buy a new one?

Most Popular Reply

8 Replies