Cah on Cash Retiurn for converting a house I've lived in.....

[Levi Bjork]

Hi All,

I'm just curious how you folks would run a cash on cash analysis on a home that you've been living in but now want to turn into a rental. What would you consider to be your "investment" into this property?

Purchased Home for $179500 in 2008 @ 3.625% FHA

Amount I owe: $155,000

Current home value: $310,000

Current Monthly pmt: $1044

Potential Rent: $1700

Adding a wrinkle, I'm looking at a cash out refi of $75K to go towards the down payment of a new home. 

New Loan amount: $230,000 @ $4.125

If i did my math right, I'll be cash flowing $223/month after PI, op expenses and vacancy. Again, what is my cash on cash here? And I'm also curious if you think this is a good strategy (can't really buy a new home without either pulling out cash or selling completely). Rents and home appreciation are on the higher end where I'm at so I would hope that eventually cash flow will increase.

Thanks all,

Levi