To Refi or Not to Refi..that is the question

[Grant Cleveland]

I have a mortgage I owe 280,000 on at 4.25% 30 year fixed with 27 years remaining.  

Down the line in let's say 1-3 years there's a chance I'll move and would like the option of converting this to a rental.  

I can rent for 2,100 (conservative).  Assuming costs of property management at 10%, repairs at 5% and vacancy at 8% I would have negative cash flow -250 or if I self manage -40.

I have a crazy notion to throw 42,400 (loose money lying around in savings) at the mortgage/fees and refinance to 3.75%.  This would drop the monthly payment to enough to have a positive cash flow +150 or +360 if I self mange.  

What factors need to be taken into consideration before making the decision?  

Thanks!  -Grant

[Nathan Emmert]

@Grant Cleveland 

I look for a minimum 10% CoC return, so this hits that metric. You can generally get that with rent ready units straight off the MLS. These aren't necessarily home runs in the real estate world, but nice solid singles that with enough income to be able to continually invest principle can lead to a very nice retirement in 20 years (my target).

I "prefer" to be in the 15 - 20% range by finding more distressed homes/sellers through FSBOs, Craigslist, driving and looking for signs (for sale or for rent) and checking eviction records at the court house (online but lag a few months behind). 

These simple steps let me buy equity and get a superior CoC return. But doing this work has changed me from someone who invests in real estate... to a real estate investor!