Homeowner looking to turn primary home into rental

[Matthew Pham]

I purchased this Houston area home back in 2018, and we are now looking to upgrade. Rather than selling the home, I have been weighing my options as to whether or not it would be a good idea to turn it into a rental. I am completely new to this and have never had a rental property so looking for some advice.

My current mortgage payment is $1850, but if I were to refinance, my payment would lower to just under $1600. Similar homes in my area have been renting for around $1800 a month. I understand that I have to factor in expenses and maintenance (home is relatively new though, 2012). Is the cashflow or lack thereof, worth the hassle of making this an investment property?

Tips and advice are much appreciated.

[Bonnie Low]

Well, it depends on your goals. Some people invest for appreciation more so than cash flow. How has the market performed in your area? Are houses appreciating? If so, it could make sense to rent it out at low to no cash flow so long as your tenants are covering the expenses. But what are you going to use for a down payment on your next house? If you don't need to pull equity out of the current house to use as a down payment, that would be another reason to go ahead and keep it and purchase another home. Either way, sounds like refinancing would make sense to lower your payment. You can do the math to figure out how long you need to hold the property for the refinance expenses to pay for themselves.