Should I refinance my home before leasing or just sell it ?

[Cindy Nguyen]

I am currently thinking about leasing my current home then move into other home.

The house worth about 500K (3875 sf, 4BR, 2 car garage, 10 year old) and remaining principal is 170K. My current monthly mortgage is $1978 (8 yrs remaining for 15 yrs refinance) and $1300/mo needs to be allocated for property tax.

The problem I have is if I lease the house with current mortgage payment, I would not make any positive cash flow due to higher monthly payment and high property tax rate 3.15% (Yes, it is Texas).

According to the local realtor's rental comp, the rent for my house would ranges from $3100-3600. This barely covers current mortgage and Tax.  There is no extra money left to cover any other expenses.

Because the house is located at a nice family oriented Houston suburb with good school, has a lot of commercial employment around the area, I could expect the steady appreciation of the property with quality tenants.

If I refinance my current home for 30 years, with current rate (Let's say 3.85), the monthly mortgage would be $800.  With $3100 rent, I would have $2300 for Operating Expenditure and hopefully some cash flow.

My estimate Operating Expenditure total is 2530 . (Tax 1300, Insurance 320, Vacancy 5% 155, Repairs 5% 155, Capital Expenditure 5% 155, HOA 70, Lawn 75 , Property management 10% 310). 2300-2530= negative 230. Without property manager and higher rent, there is some potential for some positive cash flow.

Do you think it is a good idea to refinance and lease the house?  or

Do you think it would be a better idea to sell the house, use the equity to buy smaller cheaper rental property in lower property Tax area ? - - my plan B would be 3 BR up to 2000 sf single family home with 150-200 K price range with lower property Tax rate of 2.6 area.