Landlording is not the quick, easy money you think it will be, and even pricing your rental property in a high price range does not weed out all the fuckups, weirdos and losers who look great on paper then suddenly lose their minds as soon as they get the keys. I am blessed to have a *fantastic* tenant currently who pays her rent mostly on time (never past the 5th of the month) and has only made legitimate complaints (once about the downstairs neighbors having too many parties, and some maintenace work for the radiators), but before her was a guy who literally never took the trash out in the 10 months he lived there before I evicted him. When he was finally evicted for not paying the rent (a process that takes about 10 weeks in my area, plus however long the marshals take to show up and actually do the eviction), he literally walked away, leaving his furniture, trash, cat and bedbugs (yes, bedbugs) behind. He also had broken in the apartment door when he once locked himself out, ripped the smoke detector out of the ceiling (rather than change the battery when it started beeping), and let his cat use the closet as a litter box. One bad tenant can eat up all of your profits for a year’s worth of rent payments or more, and it’s even worse in a house than in an apartment/condo. We spent over $14,000 to clean up after that asshole, and that’s after he skipped out on over $7000 of unpaid rent.
If you go through a property management company, they will keep about 20% which usually is money well spent to avoid the hassle of collecting the rent, screening the tenants and managing any repairs, but that’s still a big chunk of your money gone. Plus your homeowners insurance will probably go up, your property taxes may go up depending on where you live (owner-occupants usually pay less than owner non-occupants), and you may need to pay licensing fees to your city (I pay about $580 every two years in fees and inspections). In most areas you will continue to pay water/sewage as well, so your $900/month over your HOA fees and mortgage is really going to be more like $500/month– which is good money, but may not be worth the hassle and stress.
You also want to look into tenant rights in your area, as you may not have the right to kick the tenant out if you choose to sell the house; this may be a very big deal, as tenant occupancy can make a house very undesirable to a potential buyer. It’s another very big factor to consider.
Not saying 100% don’t do it, but do keep all your options open. For $500 a month in income, you may be better off selling the house and dropping the money into a mutual fund that never calls you to complain about broken things and won’t let its cat shit in your closet for 11 months.
(PS my condo rents for $1700/month on a one bedroom so the price point did not weed out the loser, and he did pass a credit check, background check and normal rental application.)