Starting out as first time landlord need help to crunch numbers

[Manish P.]

Hello BP members,

I am a homeowner in MD, trying to crunch numbers to decide if I should move to TX or not.
My current home A has 320k left on mortgage from 400k @2.5%, with remodelled kitchen and bath. 
Current valuation of home is about 580k. Rental approx at 2900/pm. 

For new home B, It will be 7.5% for 550k. 
Any pointers on how should I run numbers to compare two cases.

Case 1:  Rent home A, Buy Home B @7.5%, with potential refinance at 3.5-4% ( ifff thats feasible ) after 2 years, once the rates are down. ( i know high hopes , but I dont think 7.5% is the new normal ).

Case 2: Sell the home, get equity out, pay the whole equity ( dont know if thats wise ) towards downpayment of home B, reducing loan amount to approx 320k. 

As a side note, feel free to throw suggestions and let me know its a dumb move to buy property as primary residence and pay 7.5% mortgages, sit out. :) I wont mind at all. I am here to catch your brains and help make a decision.

TIA !

[V.G Jason]

If you can keep the former house, definitely try to. Make sure your DTI is fine, and you have the liquid downpayment to get the 2nd house. If not, it is what it is and if you personally want to move to Texas than so be it and you may need to sell it.

Now, if you can keep the first one and still afford a second one then great. Don't bet on rates coming down to 3.5-4% in 2 years or so. If that happens after you buy, that's a great problem. If you're penciling it on, on your buy that's a bit optimistic and you'll have to likely understand your house value would then appreciate re-creating a re-finance loan with a new & higher tax basis and insurance which would likely not make it as affordable as you are penciling in.

My best advice is to look to buy a value-add, something on the MLS for longer days or off-market. Rehab it some and then re-finance it and live in it. This is if you are able to keep the 1st property.