Keep 3% mortgage as long-term rental or sell? Sterling Heights, MI — risk-aware perspective wanted

Late 30s, married with kids. Looking for outside perspective from people who’ve actually owned long-term rentals.

Property details (Sterling Heights, MI):

• Single-family home in Sterling Heights (Utica school district)

• \~3% fixed mortgage (main reason I’m hesitating to sell)

• Fully remodeled over last few years: roof, HVAC, doors, windows, interior, appliances

• Mortgage + escrow ≈ $1,500/mo

• Worst-case \~$1,650/mo if taxes jump as a rental

• True break-even closer to \~$2,000/mo after maintenance/vacancy buffer

• Conservative rent estimate: $2,200–$2,400/mo based on nearby comps

Personal finances:

• Strong W-2 income

• \~$350k in 401k, maxing annually

• No consumer debt

• Solid cash reserves

• Wife could return to work if needed (important safety valve)

Plan I’m considering:

• Buy a new primary residence (\~$500k range)

• Convert current home into a long-term rental (LTR)

• Use a professional placement company (one-time fee) to source/screen the first tenant

• Hold the rental long term primarily because I don’t want to permanently give up a 3% mortgage

• If I hate being a landlord after a tenant cycle, I can always sell later

Concerns / risks I’m weighing:

• Tenant risk and Michigan eviction timelines

• Carrying a new mortgage while learning landlording

• Short-term stress during transition period

My thinking so far:

• Selling is simpler but permanently destroys a very favorable loan

• Buying a rental later at 6–7% interest feels strictly worse

• I’m not chasing max cash flow — goal is equity + optional income later

• I’m willing to take bounded risk here because retirement is already well funded

• Worst-case scenario feels like a $10k–$20k learning experience, not a financial disaster

What I’m asking:

• In this situation, would you keep and rent — or sell and simplify?

• For those with LTR experience:

• What did you underestimate on your first rental?

• Any regrets selling a low-rate home that could’ve been a rental?

• Any red flags in my assumptions?

Not looking to get rich off this property.

Looking to build a parallel income stream outside a W-2 career while I’m still young enough to handle the learning curve.

Appreciate real-world feedback from people who’ve done this