Keeping first home as rental and buying another

[Don Parent]

All right so my wife and I recently bought our first home, we financed it with a USDA hundred percent financed loan. We are thinking about trying to find another home and keep this one as a rental property. My wife seems to think that we can't keep it as a rental property because we don't have enough equity built into it yet. My question is does anybody have any experience with this and can shed some light on the subject.

[Travis Hughes]

At 100% LTV, you will likely be cashflow negative. Run the numbers and see what you come up with. You'll need an accurate estimate on what the rent rate would be to start. There are plenty of resources and calculators on this website to estimate repairs, CapEx, property management, etc.

Part of my strategy is to buy as an owner occupant, live in it for a couple of years, but a new one and rent the old one out, lather, rinse, repeat.  You are not likely to be successful with it if you're so highly leveraged, though.

If you need to reduce your debt service on the property, you might consider a refinance with cash in to reduce your LTV. Consult a mortgage broker to see what your options might be.