I’m getting a lot of calls as to what to do if you have to move and your current house is financed at a low rate. The answer I frequently give people who may find themselves in this situation is don’t sell, but rent. Here are the questions I ask.
First, what does the rental market look like and can you have a positive cash flow? Remember rental income – cost = net income.
Second, if there is a mortgage, you are building equity each month. Mortgages don’t last forever and when that mortgage is gone, a significant cost is eliminated. This in turn increases the net income.
Third, look into putting the property in an LLC to protect your personal assets. Alternatively, you can look for an umbrella policy. You just don’t want to be personally liable for something that may happen at the property.
Lastly, how quickly can you tend to the property? Remember you are now a landlord and if you are busy or in another state, look to outsource the management of the property to a third party.