My wife and I live in Albuquerque, NM and own our house (it's the only property we have) and want to eventually live in Santa Fe (to be closer to family, friends/our workplaces/etc). The housing market is much more expensive and competitive there and we don't have much money to put down. Currently we could only do 4-5% cash down on the kind of property we'd like to live in, unless we sold our house which seems like a bad deal at this point (to sell our place for a larger loan w. much higher interest in SFe). We have equity in our house (numbers below) but I'm cautious to use that as it seems that could decrease and I don't think our current cash flow can handle floating 3 mortgages at this time, esp considering current high interest rates. Our AGI is approx. $90k. DTI is good. Have v. little revolving debt. We have some long-term investments (401k, stocks, etc.) but don't want to withdrawal from those currently w. the current low point. I'm thinking we downsize and get a reasonable rental for 1 yr in SFe while renting out our house in ABQ. I wish we could buy in SFe now but it seems we need to work up to that possibility. Renting would allow us to be in SFe and learn from managing a single-family home as a rental.

We’re looking at renting our house as a furnished short-term rental (30-90 days) to travel nurses and other temp workers or professors on sabbatical. Or other markets, if you have an idea to share! We live close to major hospitals and a university. We’ve never managed a rental before so are learning the local landlord and tenant rights and getting things in order now to potentially rent starting Jan 2023.

Our current home:

Outstanding mortgage - $198k

Purchased for - $226k

Zillow is currently showing house value - $343k (not sure how much stock we should put into this and if this includes the improvements like installing heating/cooling mini-splits and solar -I’ve updated our Zillow profile)

We re-fi’ed during the pandemic at 2.75% and mortgage is $1,150/mo.

Comparable long-term rentals in the area are going for $1900-$2000/mo.

For furnished it seems reasonable that we could do $2300-2600/mo

We plan to manage the rental ourselves, to learn from that process and one of us has time to do that. I just read a 50% rule of thumb saying, ½ of generated income from property goes to operating expenses. Is that the case for this small scale of renting a single property? If so, if we rent furnished, profit would cover our monthly mortgage looks like from math below and allow us to hold on to our house as value continues to appreciate (even if more slowly).

$2,300 (monthly rental income) / 2 = $1,150

This seems like a good starting point as we would be covering our mortgage expense on the property. We're aiming for a rental in SFe between $1400-$1800/mo.

Long term, I’m interested in a having a few single-family homes and/or units to help bring in more income. Is there anything you would suggest that we consider at this stage? Thanks in advance for any insight and tips!

Albuquerque, New Mexico

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