Renting out my home for profit and move into an RV trailer?

[scottkeen]

I own a condo, my monthly payment for mortgage + condo fees + taxes = $1,400 per month
The rent around here for this condo is about $2,000 per month, so I can net $600 per month cash profit while someone else is paying my cost of home ownership by renting it out.

My thought is to move into a RV trailer home and rent out the condo. I would have to pay about $400-$600 per month for the month-to-month site rent at a RV park.

My rental income would cover the cost of the RV park site rental, so basically I would have no cash out of pocket and someone else is paying my $1,400 home ownership costs and paying for my RV site rental. But I would have to shell out $15K-$20K up-front to buy the trailer.

One way to look at this -- how many months of living in my condo equals the $20K cost of the trailer? Answer: $20,000 / $1,400 = 14.3 months. So in 14.3 months I would break-even on buying the trailer, and every month after that I'm saving $1,400 per month extra versus what I'm currently doing.

Does this make any sense to do??

EDIT: The RV trailer doesn't have $0 re-sale value, so even if it was worth 30% ($6,000) of what I paid for it, that shortens my break-even point to 10 months.

[GrayGhost]

After accounting for repairs to your condo, you're talking about paying $15k to just barely break even on the right to live in an RV park. The only upside to your idea is if your condo appreciates and you eventually sell it, but that's a big speculation game that you can easily get burned on.

A lot of people try to come up with these complicated and risky schemes to ekk out a few hundred bucks more a month, when there's quite a lot to be said for stability and routine in a good neighborhood. Flipping houses, renting out houses and all these things can be great ways to make money, but unless your 9-5 is not very stressful/busy or you're already retired, it can very easily be more trouble than it's worth.

If I were you, I'd get a roommate.

[adamcollin]

Moving into a RV trailer can be more expensive for you in the long run.

[CatInTheHat]

if market is $2k, how about renting your better bedroom to a friend for $1,000, and then you live in the smaller, less desirable one?  you could throw the extra $1,000 right back into the equity of the house. 

[patrickza]

Another + 1 to the roommate idea.

[aasdfadsf]

Unless I'm missing something, I don't see how you can possibly make money off of this. The $1400 that the condo currently cost you isn't going to go away once you rent it out. So if you keep it rented out at $2000 a month, you'll cash flow $600. All of that is being eaten up by the RV park fees. On top of that, you will have costs related to vacancies (even if only one month per two years, that's $83 per month) and possibly much higher maintenance costs, especially if you get a bad tenant who trashes the place. And you have legal liabilities, plus the cost of your own time and effort in being a landlord. And on top of that, there's the cost of the RV itself. RVs depreciate very rapidly, and so you lose at least a several hundred a year off of that, plus the opportunity cost of the sunk capital. And to make things even worse, the profit you get off the condo is taxable income, whereas I'm pretty sure the cost of the RV and the park fees are not legitimate write-offs.

You need to own a dwelling that can draw much higher rents and/or that carries far lower costs before this becomes a workable idea.

[GrayGhost]

What's really crazy is that a lot of people, and I mean a lot, will buy properties that just barely flow cash under ideal circumstances, or worse yet, are cash flow negative. They either play the appreciation game or wave off numerical concerns with "oh it'll all work out alright" naivity. Real estate agents are more than happy to make sales happen, as they're the middleman.

The truth is that good deals for rentals are a bit hard to come by these days, in most markets. When you look at the numbers, be harsh and be skeptical, because there is no requirement in this world for things to turn out okay. Bad things happen, financially, to good people, all the time.

[Dicey]

Roommate.

[cchrissyy]

this doesn't make money

+$2000 rent
- $1400 condo monthly fixed expenses
- $600 monthly cost for where you'll live (the RV space)
- everything else

= bad idea, loses money