Investment StrategiesHow to Rent Your House and Buy Another by Alex Karani March 24, 2020March 21, 2020 by Alex Karani March 24, 2020March 21, 2020Becoming a landlord is a lucrative opportunity for investors to earn long-term cash flow and other financial rewards. However, if you are thinking of becoming a landlord, there are many paths you could take. One possible way is through renting out your primary residence before buying another. For instance, if you have been living in a particular place for some time and your family has expanded, you may want to move to a bigger house and convert your current house into a rental property. If your primary residence does not meet your needs anymore, that doesn’t mean it won’t meet someone else’s needs. There are probably other people who would be happy to live there.Related: 3 Easy and Savvy Ways to Turn Your House Into an Income PropertyConverting your primary residence into a rental property is one of the simplest ways to become a landlord. However, if it’s your first time venturing into rental properties, you will need to learn how to rent your house and buy another. For instance, you will have to first look for a new home. There are some situational factors that you will have to consider. What are the rules for getting a new mortgage when you rent out your house and buy another one? These are the kinds of questions you need to answer before getting started. Continue reading this guide on how to buy a second home and rent the first to learn more.Why Should You Rent Out Your House?But before we learn these factors, why should you consider this option? Here are some of the benefits of buying a second home and renting out the first:You will have an extra source of monthly income as long as the house is occupied and the rental rate is high enough to cover your mortgage.If the current value of your home is lower than what you purchased it for, renting it out will give it a greater chance to increase in value. Buying another home and renting out the first gives you more time to monitor the local housing market and sell when the value of the house is high.Buying a house and renting out the old one is usually less expensive and easier than getting a new investment property loan. A mortgage for non-owner occupied property usually needs a larger down payment and has a higher interest rate compared to a mortgage for your primary residence.Tips on How to Rent Your House and Buy Another Before converting your primary residence into a rental property, there are some things you have to consider to ensure that it is a lucrative and sustainable property investment. The key to success in renting out your first home is conducting proper due diligence and preparing well.Here are some important tips on how to rent your house and buy another like a pro:Review your existing mortgage It’s possible for property owners to rent out a mortgaged house. However, make sure you check out your lending agreement to know whether you are allowed to convert your first home into a rental property.Sometimes mortgage lenders may require you to wait for a certain period before you can rent out the property, pay a penalty, or refinance. Some may not allow renting. If your lender has clauses against rental properties, you can refinance with another mortgage lender that allows it.Can you afford a second home?When researching how to rent your house and buy another, you should also determine if you can afford a second home. Can you handle having two mortgages? Consider meeting a mortgage expert to help you determine whether a second home mortgage is feasible for you.Keep in mind that there may be periods when you may not be generating income due to vacancies or expensive repairs that may be needed. Therefore, it’s important to have financial reserves to cover unexpected costs.Before you begin shopping for a second home, make sure you get a mortgage preapproval from your lender. Apart from being an excellent negotiating tool, it will indicate how much you can borrow so that you can shop for homes in the right price range.Run the numbersThe main goal of renting out your house is to make a profit. Therefore, you need to research the monthly rental rate you could charge as well as the carrying costs of the rental property (mortgage payment, insurance, property taxes, utilities, etc.) You can then estimate the potential cash flow of your rental property. Remember to also factor in the vacancy rate in your neighborhood. This will enable you to know whether renting out your first house is a profitable decision.You can do a rental property analysis on your own home in a matter of minutes using Mashvisor’s rental property calculator. Simply enter your home address into Mashvisor’s investment property search engine. You will then be prompted to add a little more information on your home:Adding Your Home to Mashvisor’s Real Estate DatabaseThis information allows Mashvisor’s real estate database to gather all the available property data you need to analyze your home including the rental income, cash flow, cash on cash return, and occupancy rate:Mashvisor’s Rental Property CalculatorRelated: Think Like a Rental Property Calculator: Numbers You Needs to Know Sign Up for MashvisorConsider hiring a property managerIf your budget allows, consider using professional property management. As a first-time real estate investor with little or no real estate experience, a good property manager can help you to maximize your rental income and save you time. The property manager will help in pricing, marketing, tenant screening, communicating with tenants, collecting rent, and other duties.However, if you decide to manage it on your own, make sure you understand the local property laws. Be ready to handle all the day-to-day duties by yourself. This might not work if you have a full-time job and can’t find enough time to maintain the real estate investment and attend to your tenant. So if you feel it’s not working out, go back to the idea of hiring a professional.Related: Residential Property Management: Here’s How to Do It YourselfThe Bottom LineRenting out your house and buying another is one of the easiest ways to become a landlord. However, you need to understand the process before you even get started. Once you confirm that you are allowed to convert your primary home into a rental property and can afford a second mortgage, run the numbers. If your house is profitable, you can begin the process of buying a second house. You will also need to begin looking for tenants or hire a property manager to handle it.Start out your 7-day free trial with Mashvisor now. Start Your Investment Property Search! START FREE TRIAL Investment Property AnalysisLandlordMortgageOwner OccupantRental Management 0FacebookTwitterGoogle +PinterestLinkedin Alex KaraniAlex is an entrepreneur and an experienced content writer focused on personal finance, business, and investing. For over six years, he has contributed to a number of publications, both online and print. When he's not writing or working, Alex enjoys reading, traveling, and the outdoors. Previous Post What Airbnb Occupancy Rate Can You Expect in Florida in 2020? Next Post How to Find Positive Cash Flow Multi Family Homes Related Posts The Best Low Risk Investments in Real Estate for 2020 4 Things to Know Before Investing in Real Estate What Are the Best Real Estate Investments for You? Our Guide to Real Estate Investing for an Early Retirement How to Invest in Probate Real Estate Is Investing in Rental Properties the Ultimate Way to Succeed in Real Estate Investing? When Is Buying a Second Home to Rent Out a Good Idea? Passive Real Estate Investing: A Myth or a Reality? How to Recession Proof Your Rental Property Key Aspects of Short Term Rental Property Management Is Real Estate a Good Investment for Young People in 2018? Should You Turn Your Apartments Into Condominiums?