Now let's look at your numbers.
Current value of our home: $535,000 (conservative estimate - we will soon get an appraisal and I anticipate it could worth be a good deal more than this)
Mortgage: $410,000 at 3.29 over 25 years
Monthly P+I: $1940
Monthly property taxes: $210
Potential rental income: $1350 for the basement suite, $1550 for the main floor = $2900
Monthly surplus: $2900 - $1940 - $210 = $750
*We may pull the equity out of this house in order to contribute to our downpayment on a new house. I anticipate this would raise the mortgage payment by $200 per month maximum, at today's interest rates.
50% of 2900 rent is 1450. Since your P&I is 1940, this is obviously huge cash flow negative under the 50% rule.
Even if you discount the 50% rule and try to run your own numbers, I think you can get it close to break even, but realistically it'll be at least slightly cash flow negative.
You in the above numbers, to get your surplus, you don't take into account many of the expenses.
For example, the general rule of thumb on maintenace is 1-3%/yr. of the purchase price:
https://www.google.com/search?q=percent+per+year+house+maintenance Some sites say all the way up to 5%, though I think that's high. But keep in mind, yours will be higher than an owner occupied, because a tenant is less likely to take good care of a home than an owner is.
Management fees are 6-10%. If you don't pay yourself for this, you're working for free and valuing your time at $0/hour. That is not the correct way to calculate your return. If you end up cash flow negative by $100, but "pay" yourself $200 in management, you should view it as that: house is cash flow negative 100, and you have a $200/mo PM job. Not as a cash that is cash flow positive by $100 (oh, but you manage it at $0/hour...)
2900 rent
-210 taxes
-? insurance (look this up to get an accurate number)
-446 maintenance (this is using the low end number, 1%, on 535k is 5,350/yr, or 446/mo)
-174 management (using the lowest 6% number)
-1940 mortgage
___
That already comes out to only 130.
It is not counting:
- Insurance
- Vacancy (even if your town has very low vacancy, you'll still have some during tenant turnover when getting the place rent ready again.. even 2 weeks/unit per year, a pretty low amount of vacancy costs you a prorated amount of 111/mo.)
- Any utilities you have to pay (tenants often pay most, but I pay sewer, for example .. with a duplex you'll probably find yourself paying more than you might with a SFR, simply because the two units don't have separate meters for utilities)
- Collection losses (i.e. a tenant not paying you - which will happen at some point, hopefully very rarely).
- Long term capital expenses like roof replacement you should be putting money away for.
- Any marketing you have to do, or other misc. stuff.
Even if you think you can beat the 50% rule, which says you are cash flow negative almost $500 per month (!), I don't think you can get anywhere close to making that house cash flow positive.
Now the plus side? Tenants are paying off that mortgage for you.
Principal pay down (aka equity gain) along with tax benefits/deductions (not sure what's available to you Canadians) may make it turn out to put some money in your pocket. It may or may not turn out to be an okay investment, and we can discuss that.
But cash flow positive? By the $750 you claim? Sorry.. no. =/