Stay in home or rent it out?

Question

I own a detached, raised ranch (3+1 bedrooms, 1.5 bathrooms) with a relatively affordable mortgage. Looking ahead, I can't decide what to do with the home. On the one hand, I want to get it paid off as fast as possible and on the other hand I'm entertaining the idea of renting it out (~$200/month margin). Any input would be greatly appreciated.

Nicholas L. · Answer

Hi @Heval O. I'm supportive of renting in the short term because there are no entry or exit costs like there are for purchases and sales.  You just pay rent - it's a great deal (again, in the short term) because of the flexibility.

With respect to pulling equity out, it's definitely worth considering.  See what kind of rates you'd get.

Heval O. · Answer

@Matt Nusbaum @Nicholas L. I used the bigger pockets calculator to come up with that number but will double check it again to see if I included vacancy etc. Assuming it's $200/month, I'm considering renting my place out and pulling equity out of the home to put down on another in a cheaper city a few mins from where we currently live or just rent there... How do you guys feel about that?

Matt Nusbaum · Answer

@Heval O. If it cashflow $200 after all expenses I would rent it. Have someone else help pay it off for you!

Nicholas L. · Answer

Hi @Heval O. if it cash flows, it might be a good rental.  Does your $200/month calculation include vacancy, repairs, capex, etc.?  There is very little advantage to paying it down if you can use the funds you'd use to pay it down for a different purpose - such as another cash flowing property.