I am moving. Should I sell my current house or rent it out?

[Chris Lefstad]

Hi BP-

My wife and I have been looking to upgrade houses for about a year now, and finally closed on our new home just yesterday. We both have really enjoyed the search and have been considering making the leap into real estate investing by holding onto our current primary residence and renting it out. If we were to do this, we'd get a PM to find tenants and do the legal/leasing for us in exchange for one month's rent, but I would take the management from there.

I was introduced to BP through the podcasts, and have been reading up on real estate investing, and I'm pretty convinced that I want to get into buy & hold investing as a retirement strategy, but I need some advice as to if my current home is the right place to start. 

• I owe $140,000, and could sell for about $175,000
• After expenses, I'd cash flow about $100 UNTIL I pay off a $10K second mortgage that I have on it. So, if I buckle down and get that paid off quick, I would soon be cash flowing $350/mo

My thinking is that selling this thing would cost almost half of the equity that I have into it, but on the other hand I don't know if there are better things I could do with the equity I'd get. HELP!

[Jonathan Cope]

Chris,

Congratulations on the new home purchase and your consideration of real estate investing.

Consider listening to podcast 78 as a benchmark for entering investment as you are.

@Brie Schmidt discusses how budgeting could assist you with your $10k effort.

Consider reviewing craigslist for your area as a resource to confirm available area rents, as does @Michele Bruce per her podcast.

We don't give away fee to PMs for tenant sourcing or screening.

You'll need a relationship with your tenant and it should begin before you agree to have them rent your place.

Landlord work early in an investing career tends not to be an arms length effort.

Be wary of trying to make it so for any stage.

Yours is likely not really a question as to what to do with the equity you have in the home but more as to whether you want to be a landlord and whether your market is tenant rich.

Good luck.