Question(s) for FBG real estate moguls:
I’m looking to move (we want to upgrade our primary residence for school district quality and commute reasons). Fully own our current ‘starter’ home in a solidly middle class neighborhood. The metro area is low housing cost but with high property taxes (upstate NY).
I’ve been thinking about keeping our starter home and renting it out as an extra source of income/portfolio diversifier (all other investments are in HYS accounts (new home down payment) or vanguard index funds (retirement and college savings accounts).
I used this
calculator to determine my cash flow and return and it spits out a value called the IRR that is at best 6% (with rosy estimates for rental income and maintenance).
1. Is this calculator any good? Any other hidden costs I should consider when deciding to rent (other than sweat equity)?
2. How is this projected return? Honestly doesn’t seem worth it to me if I consider it an approx 2.5-3% bump over just throwing the amount into payments on the new home (assuming a mortgage rate of 3-3.5%) plus the work involved in managing the property (wife and I both work full time but with decent hours). Am I doing that math right?
Thanks for any tips!