Selling vs Renting House

I dont see a problem with it. I'm not really in the rental space, but if your meeting your requirements and the property is appreciating, I think you'll be fine.

I asked a similar question on here a few weeks ago.

Here's the thread.

The major factor for me deciding against it was the Section 121 Exclusion.

Basically, capital gain taxes are excluded on up to $250K gain on the sale of your primary home ($500K if filing jointly), but you have to sell within 3 years of moving out (its a little more complicated than that, but that is the TLDR version).
Obviously it depends on the specifics of your situation, but for me, even optimistic numbers did not justify passing up that tax-free gain.

Before you do anything else, get a quote on switching that owner-occupied homeowner's insurance into a commercial policy (because you're renting). This might change the numbers dramatically.

I'll third the no.

There's not enough margin there to justify the debt risk. I wouldn't look twice at this deal.

You shouldn't count your mortgage principal as an expense. A $200 cash flow turns into $700-$900 cash flow when you consider principal.

Let's say you are netting 7000 a year. How much equity do you have in the house? If it's $50,000, you're making a 14% return, not too bad. If it's 100k , a 7% return, meh... if you take out a home-equity loan to further invest, and or have little equity in the house, you're basically making money from someone else's money, all profit.

So as long as you don't have trouble getting another loan, you should definitely consider doing it. That being said I do think that New Orleans real estate is at its highest, and is a higher risk. Try it out, and if it doesn't work for you you can always sell it. It's a easy transition, since you already have the property in your name.

I guess you will always have some equity in the house. You can't usually get a home equity loan for more than 80%. Your max return will be on 20% of your equity.

Are you selling your house by owner or with an agent? I’m surprised you’re having a tough time selling it although if you want top dollar you might have better luck during the summer.

You need to get about 500 more than your mortgage. Once taxes are paid which can be offset by some expenses you will only have about $350-400. That would be the bare minimum I would want to make a month to deal with any kind of issues of renting a house.

Yea, cash flow was a poor choice of term. Maybe ROI would be better. And also a good point of having an extended vacancy causing troubles if you can't afford a second note. And having easy liquidity to your earnings is important too. It would suck to have to pay that during a vacancy, but a large portion of it would go to equity. People dream about a $10,000 raise from their job, this is near the same to me, and could be the start of multiple rentals, and really change your life. Yes, maybe you can find a more efficient use of your money in real estate in your area, but nothing will be more easier than rentting out what you already have. Many people who start in real estate investing will use a loan, and a large portion of the returns will go back to the loan. The properties I have are low income, all cash flow, and will never appreciate more than inflation.

Some people invest in speculation, and appreciation. Some may be happy with a $5000 yearly cash flow, and others are happy with little cash flow but in five years hope to sell for $100,000 more. Depends on your goals, short term or long term.