Refinance current home as first rental?

[David M.]

Hello BP Community. I am looking for input on whether or not this would make sense to someone with a bit more experience than I have. I am thinking this might be the least expensive way at the moment to start out in REI.

I currently have a mortgage payment of $1430/month on my primary residence (including PITI & PMI). It is a 15 year loan with 14 remaining. If I could refi for 30 years, I could get the payments down to about 915 or so (including PITI & PMI). Rents for these types of townhouses are anywhere between 1150 and 1275 in this area. It would need about 4-5K of work to bring it up to rental condition. (Carpet, new paint, and few odds and ends).

To keep the math simple, let's conservatively assume PITI would be $1000, and the rent would be $1200. Do you think that is cutting it too close with only $200/month cashflow? The units were built in 1989 I believe, so it will more than likely need a new roof within the next few years. I believe the furnace and water heater are solid, and the central air unit was replace 2 years ago.

Alternatively if I could refi for 30 and take some equity out (not even sure if that's possible yet), I could use that as a down payment on something else, and keep my primary residence as is.

Thanks for your input.

[EDIT]

I guess after factoring in vacancy and capex, it would be more like $150ish/month cash flow on the conservative side.