Primary residence as a rental

[Tim Sipowicz]

I've been told twice now that using my primary residence as my first rental property would be a good move. I've thought about it and I'm starting to agree, I would just like some feedback on the approach I want to take. We were initially looking to sell our home and use the profits from the sale as a down payment on our next house. But now instead, hold onto the property as rental, buy a new primary residence with an FHA loan and get a little more sq footage for our growing family. My question is though, is it a backwards move to open a new mortgage that's just going to increase our monthly expenses with a higher payment? Also, how do I approach this situation correctly to keep building and acquiring properties after we get settled into our new home. If I need to clear anything up, please let me know because this may be a winded post. Thanks in advance!

[John Clark]

"the home should cash flow $200-300 dollars. "
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From the numbers you gave, that house does not cash flow. Cash flow is much more than rent minus (mortgage plus insurance plus property taxes all wrapped into one payment). You will have capital expenses, you will have maintenance, a vacancy, management fees -- you name it. You may get lucky and not have capital repairs for a long time, but you need to reserve for them.

So your old house won't cash flow, which means you have to see if any appreciation  will make it worth your while.

Sell, move, and buy a two or three flat in your new town that you can live in and rent other units at the same time.