First time home owner running the numbers - negative cash flow with a 2.25% rate

[Austin Merritt]

I've been running the numbers on my first primary residence that I will be moving out of in June. BLUF - this would be my first rental property and I'm on the fence about what to do with the home. I currently have about $112,000 worth of equity and also have my VA loan tied up in the property. I locked in a great rate at 2.25% in 2021. My house is located in an appreciating area outside of the Denver Metro area. I will be moving out of state and I will be bringing on a PM company.

After running the numbers, I would be facing negative cash flow every month after accounting for all the expenses (Annually about $1,000 - and that's the rosy estimate)  Is it worth it?  If I sell the home, I don't plan on doing anything with the proceeds other than parking it in a HYSA.  I would love to keep the home for many reasons - potential appreciation, landlord experience, tax benefits.  But at the end of the day, it will not cash flow. 

[V.G Jason]

Quote from @Austin Merritt:

I've been running the numbers on my first primary residence that I will be moving out of in June. BLUF - this would be my first rental property and I'm on the fence about what to do with the home. I currently have about $112,000 worth of equity and also have my VA loan tied up in the property. I locked in a great rate at 2.25% in 2021. My house is located in an appreciating area outside of the Denver Metro area. I will be moving out of state and I will be bringing on a PM company.

After running the numbers, I would be facing negative cash flow every month after accounting for all the expenses (Annually about $1,000 - and that's the rosy estimate)  Is it worth it?  If I sell the home, I don't plan on doing anything with the proceeds other than parking it in a HYSA.  I would love to keep the home for many reasons - potential appreciation, landlord experience, tax benefits.  But at the end of the day, it will not cash flow. 

So it's OTM by less than $100/mo. But if miraculously it was neutral or positive $100/mo, it's a no brainer you keep it?

You're being penny wise, pound foolish. It'll be intrinsic in a couple of years, the actual debt is an asset itself, so what you're out $1000/annually. Is that financial loss that detrimental to you, to you cannot weather it? If so, then yes sell. If not, you'll be fine. 

The pass or fail test of cash flow is taking more significance than all the other positives it brings. Look at it a whole. Anyone that makes $200/mo in cash flow is truly net negative. The real intrinsic properties are the one in which their debt is half or below their rent revenue, anything tighter than that --it's truly cash flow negative. I don't care what the cheap, low barrier of entry investors tell me. The only tangible issue I see with keeping it is the whole VA allocation you get if you were to buy a house. Now, that's a legitimate one but the $1000/annual loss is a joke