Sale or rent 580k single family home

[Jacob Souers]

I have a house in New Orleans that I’m trying to determine if I should sell or rent. I have bought and sold a few personal houses but I have never rented out a property. Needless to say, I’m interested in have multiple rentals

Numbers:

purchased it for 530k in 2018

Currently worth 580k

I owe 390k

I could rent it for 3500k

Interest rate on the house is 2.75% fixed for 30years

Mortgage with escrow is 2700 per month

Should I rent it or sell? If I rent it, I’m going to cash out refinance the max.

[Mike Wood]

@Jacob Souers I would sell it.  Run the numbers on the cashout refi, and you will see that you may be cash flow negative on this house.  

Unless you lie about you residency, the max LTV on a cashout would be 75%, which puts you with a mortgage of $435k (getting only $45k in cash), non-owner occupant properties have higher interest rates, so you likely in the 3.75-4% range for 30yr. That puts your P&I payment at $2000-2100, leaving $1400-1500 for taxes, insurance, repairs, capex, vacancy, and cashflow. My guess is that will leave you very little for cashflow.

If you sell it, you will net around $135k to move into other properties.  Assuming your moving the money into multifamily (2-4 unit) properties, your buying power is $528k, but on properties that will cash flow much better than an expensive single family.