Sometimes I think about renting out the townhouse we currently live in, and buying a single-family home nearby. I've been around landlording (my dad did some) but I have no first hand experience. Here are the numbers:
Based on what nearly identical townhouses rent for, rent is $2500
Mortgage, $1140
Tax, $500
Insurance, $100
HOA, $170
Sewer, $40
Allowance for vacancy, $250 (10%)
Allowance for repairs, $250 (10%)
That's about break even, then there is depreciation and tax considerations. Renters in the neighborhood are typically people who transfer into the area and want to rent and get a feel for the area before they buy, and couples with children in the school district who get a divorce and need to maintain two households, but want to stay in the district.
These numbers are based on a value of about $360,000, and a mortgage of about $240,000 (30 yrs, 3.75%), so equity of about $120,000. Prices are still depressed about 10% from the 2007/8 peak.
Do the allowances for vacancies and repairs look realistic? Is break-even worth the headaches of land lording? Anything else I should be asking?
I'm open to people's thoughts.
Thanks, Jeff