But make a list and check it twice

You can build your real estate portfolio starting with your own house.

The holidays are a great time to create your list of wants-and-needs for a new home.
While you are at it, also ask yourself a question: Should you rent out your existing house instead of selling?

Recent news shows that buying is cheaper than renting. When you turn that around it means rents are up for property owners. And you could be one.

A study by Trulia.com shows that, in 100 of the largest metropolitan areas, buying a home is cheaper than renting. Averaging all areas, buying a home is nearly 35 percent cheaper than renting.

In some areas, there is a dramatic difference. In New Orleans, buying is 52 percent cheaper than renting.

The study took into consideration down payment, taxes, insurance, and utilities. It assumed that the buyer would live in the home for seven years.

That’s good news for potential buyers. But it is also good news for property owners who want to lease their homes.

If you have a personal mortgage and have lived in your home, you can rent it out without getting another mortgage. This is important because investment mortgages have higher interest rates and down payments ranging up to 25 percent. Conclusion: If you want to build a real estate portfolio, it is less expensive to live in a home and then rent it out instead of buying a home as an investment property.

One potential stumbling block here is that you have to qualify for another mortgage. Lenders will consider your debt-to-income ratio and another mortgage could pose a problem. One possible way to overcome this is to establish a lease before you go to the lender.

According to Zillow, lenders will want to see you have some property management experience before they count the lease as income.

You might want to consider a professional leasing service for your property to find qualified renters.

However, if you do qualify for a second mortgage, you will have some tax advantages related to depreciation and the deduction of maintenance expenses, and the deduction of your mortgage interest.

Beyond that, it is a matter of homework. Consider whether your home is rentable in your area. Larger homes might not be marketable.

Look into rental rates in the area.