Buying a 2nd Property, and Renting Current Home

[Val Williams]

Hi all,

Hoping to talk this through with people knowledgeable in this area.

I own a 3 bedroom 1.5 bath home in Bergen County. With taxes, mortgage, and insurance my monthly payment is around $2600/month.

My husband and I have been toying with the idea of renting out our current home and using the rental income to offset our mortgage qualification in the debt/income calculation to buy another home. We've already talked this through with a mortgage broker and would qualify for the price point we had in mind.

 I believe we'd get at least $2300 if we were to rent it out. Possibly more like $2500, but I'd rather estimate low for these purposes. We also have a 3 car garage in our backyard and currently rent out 2 of the 3 bays (keeping 1 for personal use) for 200 each. So have $400/month that would be coming in on top of that, and potentially another $200 if we successfully rented out the 3rd bay. But the garage isn't entirely consistent so I wouldn't count on all of the bays being filled at all times.

Like much of Bergen County, the house is an older home that will inevitably have repairs come up.

If we do this, it won't be for the purpose of having a positive cash flow every month, since I know that isn't realistic. But is this a decent idea or is it silly to consider? We would be using a VA loan, so if we were to buy a 2nd home we'd need to live in it. So buying an investment property in a different location isn't an option. Most likely we'll either just stay in our home and continue on as we are, or move forward with this plan where we rent it out and move to a new home.

Looking more for whether this is a smart idea for the long term. And any factors I'm inevitably not thinking of that I should consider.

Thank you!