Also keep in mind that your E&O insurance will typically not cover you when you are a principal to the transaction.

@Joe Villeneuve I meant the normal principal paydown with the rent payments.

I bought a new house which we're going to use as a principal home and I am going to rent my current house.The house has a basement which I rented 3 times.

I already have two houses (principal home and investing home).

It takes a while to build equity through appreciation and principal pay-down.

If you refi'd into a 30 year loan, you can still pay the extra monthly principal payments to pay it off in 20 years, but you always have the choice to pay the less amount and possibly cashflow, if you wanted.

Just to make sure I understand, if the property is producing positive cash flow to at least cover the mortgage principal, interest and taxes, that cash flow negates the debt of that mortgage which keeps my DTI in line.

Is it like a traditional mortgage where the interest in the first year is high compared to the principal?

You can wait for appreciation and principal paydown after time and pull the money back out.

If you take a cheaper $80,000 property that rents for $1,000 a month, and you do a 75% mortgage on it, between your principal, interest, taxes, insurance, and maintenance reserve you will likely spend about $600-$700/month.