Turning Primary Residence to Rental

[Michael M.]

Hello, I’m considering turning my primary residence into a rental and moving out of state. It’s a 3000 sf 5 bed 3.5 bath new build (2022) with really nice finishes. We bought at the peak of the market in 22, and can’t stomach the loss in equity + paying an agent to sell. Our plan is to hold the house 5 years + until the market comes back, or possibly just holding it long term. 

I'm considering either the STR or LTR strategy, but haven't quite decided which would be better / less of a headache.

Mortgage is roughly 3250 and I think we could rent for 3450 to 3600. Not sure on how much I could airbnb it. We're located in Buda which is a bit outside of Austin, but still only about 20 mins from downtown, so I think there's still good STR possibilities.

Im curious if anyone has any advice or things to keep in mind when doing something like this as it will be our first rental. Curious if anyone here has gone through something similar and could share their thoughts / advice. 

[Nathan Gesner]

Quote from @Michael M.:

I'm a big fan of holding property forever, but you need to know the numbers. Have you ever learned how to evaluate a property to calculate whether it's a good investment or not?

Your mortgage is $3250 and it could rent for $3600. That's only $350 a month. If the home sits vacant for one month, you lose an entire year of profit.

Here's a very common scenario. The tenant fails to pay their last month of rent, moves out, and leaves some cleaning and repairs. You lose the last month of rent ($3600), cleaning and repairs ($2000), and it takes a month to turn it around and place the next renter ($3600). That's $9,200 lost, which equals over two years of profit lost!

Here's a guide to learn how to calculate whether a property is worth investing in (or keeping).