3) Be patient and diligent when interviewing renters and have a well written applications and leases drawn up should you decide to move forward.
I personally own a multi-unit investment proprety and would consider $150/month cash flow suitable t cover the maintenance costs and those unknown costs for your home. Another option is to sell, as John Youker pointed out, if the home is priced strategically, it will sell and then I suggest you purchas a duplex!
Best of Luck,
Check with an accountant, because some of the decision hinges on your personal finances. For example, from the numbers you presented, you're likely to have a slight negative cash flow. Can you handle it? On the other hand, you'll be able to depreciate your rental, so that will help shield some of your income. How much of a benefit will that be? And, if you do rent out your present house (versus selling it), will you have enough cash available to purchase another house?
And that leads to another point: Lenders will discount/reduce the amount of income you're receiving on your rental by 25% or so. That means when they're calculating debt-to-income ratios, they won't allow $9,600 of income ($800 a month x 12 months) to offset the expenses. Instead, they'll cut it down to about $7,200. That's to account for vacancies, maintenance, etc.
Your payoff will come in appreciation when the market strengthens again. But you don't want to be struggling in the meantime with uncomfortable negative cash flow or the landlording hassles. Personally, what you're considering can be a great strategy. Just check with an accountant, know what your own tolerances are, and go into it with your eyes open.
3 BR ranches in Huber Heights (and the entire Dayton area) are popular rentals/investment properties. I recommend you pick up a copy of The Millionaire Real Estate Investor by Gary Keller. It’s a great resource containing strategies and formulas for building wealth through real estate investing. It’s no secret foreclosure are high in the Dayton area. Those displaced people will need to live somewhere. Bill Seufert’s remarks regarding the numbers and his cautions are solid. Make sure you thoroughly investigate the rental market in your neighborhood before making the leap. And be sure to speak with a lender about how to structure the deal financially. You will likely need to refinance the first loan.
As John Youker mentioned, every market is different and here in Dayton, the picture is not as grim as painted by the national press. Should you decide to sell, if you do experience a loss, your long-term gain on a move-up will far outweigh that loss. After all, market conditions affect everyone.
If you’d like an objective opinion on your home’s value, I’d be happy to provide a no-obligation, Comparative Market Analysis of your home. My contact info is listed on my website. Good luck with your decision.
Although my brother and sister are UD grads iam not sure that qualifies me as an expert in your area. However numbers are numbers. If you can get $750 or more a month in rent and you are currently paying 705/month, that sounds like a pretty good deal on the surface. Assuming that payment includes your taxes and insurance you could have positive cash flow right away with someone else paying down your debt.
You also have to consider vacancy and maintenance expenses. If you loose your tenant for 2 months and have to spend some cash fixing it up for the next tenant, are you in a position to do so? I don't believe there are enough available characters to explain all of the tax benefits but that is something to speak with an accountant about.
Consider this, if you rent the house out for awhile and the market, which it will, goes back "up" then someone else paid your mortgage while you waited for appreciation.
Heed this warning, being a landlord is not all fun and games.
I would speek to a local Realtor so they can give you a good idea of where your market currently is and if there is anything happening that may effect the future housing industry in your area.