Rent or Sell Our Current House when we move?

[Kevin Maldonado]

My family and I are looking to move from our current town home into a single family home in a much better school district. I’ve got the age old question of whether we should sell our townhome or keep it and make it our first rental.

This is my first post on BiggerPockets so please let me know if I have left out any information that may be helpful in the analysis.

Single Family Townhome

Built: 2001

Purchase Date: 2008

Purchase Price: $270,000

Property Tax: $5700/year

HOA: $125/month

Water/Sewer: $1320/year (Must be paid to county by home owner)

Insurance: $800/year

Maintenance Costs: $400/year

Other planned future costs: Roof (in about 5 years, ~$5000), water heater (in 7 years, ~$1300 including labor), water softener (in 5 years, $500)

Current Mortgage (Refinanced in 2012)

Term: 15

Rate: 3.375%

Principal: $140,000

Market Value: $230,000 (Upstate NY market with minimal appreciation expected)

Rental: $2000/month ($2200 possible but I want to be conservative)

I was also considering refinancing to a 30 year mortgage to help with cash flow but I’m not sure if it is worth the $4000-5000 in closing costs to refinance.

Normally I would not consider this a good rental property because of the low/negative cash flow. However, since we already own the property we avoid the transaction costs of selling when we move. We have also lived in the house for 9 years so we are familiar with how to repair and maintain the house.

My questions are:

1) Does it make any sense to keep this property as a rental when we move?

2) Would you refinance the property to a 30 year or keep the current mortgage?

Thanks for any advice you may have and please let me know if there is anything else I should consider.

-Kevin