Hi All, I'm leaving my primary residence to move to another State shortly and am intending to rent it out rather than sell it. Based on the time of year, rent prices for what I could realistically get for it are about the same or a tad lower than what my all in costs would amount to, making it likely i'll be slightly cash flow negative even if Net Worth positive from this rental.

An option i'm toying around with is doing a recast to make the cash flow better. I would have assumed that recasting in any form would effectively have a Rate of Return equal to my mortgage interest rate but that's not what I'm seeing from my math.

In my case I have approximately 197k mortgage balance and the monthly principal and interest is 911.84. With a 50k recast the monthly payment decreases to 678.56 for a monthly savings of 233.28.

(233.28 x 12)/50,000 = about .059. It looks like close to a 6% annual return on the recasted amount towards principal from a cash flow standpoint but my 30 year fixed mortgage is only 3.75%.

So I have two questions

1. 1) Is doing a recast to turn a cash flow negative rental to be positive a good use of funds, or it just trying to stubbornly correct a prior mistake (sunk cost fallacy)?
2. 2)Was my math wrong in determining the rate of return on the recast? I would have expected it to be the same as my mortgage rate of 3.75%, but if it actually is 6% that seems pretty good.

Any feedback is appreciated.