First rental question

[David Luna]

I have an exiting single family home (currently live in) that I am considering converting into my first rental (plan to purchase new home for me and my family to live in). These are the facts:

- My neighborhood has average rents of $1,400 - $1,450 (using $1,400 to be conservative). SAN ANTONIO, TX AREA

- Current mortgage payment = $1,150 ($111,000 left for 22 more years - 5% rate. County assessed value = $170K)

- Monthly Expenses calculated: HOA $30; $210 for repairs, cap ex, and vacancy (using 5% of gross rents for each or $70 each); Property Management $140 (10% of gross rents estimated); and Current mortgage payment of $1,150 which INCLUDES taxes and insurance). TOTAL EXPENSES = $1,530 (Plan to have tenant pay for utilities).

- Monthly Cash Flow = -$130

With an estimated negative cash flow, should I not be considering this home as my first rental? I know I could refinance this current note back to a 30 year mortgage to reduce the monthly PITI payment, but considering that I have almost $60K in equity, is this a wise move?

Any thoughts on the above situation? Or anything I may have made an error on regarding the above information?

Thank you.