I'm thinking about moving to a bigger house that has a bottom section I can rent out and house hack. Either a split level style or separate in law suite downstairs.
Trying to decide if I should sell my old home or keep it and rent it out.
Current home- worth about 270-300k
Owe-167k on a 15 yr fix @2.75, payments are 1160 a month, not including tax/insurance.
Rents in my neighborhood go for 1600-1900
My target range for the bigger house would be a max of 330k and I think could rent the bottom out for 800-1000 per month.
Scenario 1: I rent out my old house, I factored in taxes, insurance, 5% for vacancies and 5% for repairs and I'm estimating $150/month cash flow.
My payments on the new place would be about $1750 - 900 from the tenant = $850/ month.
I would also need to come up with a down payment of around $11k, maybe borrowing from my 401k.
Scenario 2: I sell my old home, net approx $100k after commissions and then put down on the new house. Then my payment would only be around $1284 - 900 from the tenant = 384 month, practically living for free. I could then use that monthly savings to save up and start real estate investing, probably with a flip.
The thought of carrying 2 mortgages is scary as I am brand new to all of this.
Appreciate any feedback!
