Options for Current Rental

[Stephanie Medina]

Hi all, I posted about this before but just wanted to come back with a little new info.  I'm new to real estate and want to grow my portfolio (a few years out from another), and I currently rent out our previous single family home.  It's a 3 bedroom/3.5 bath in a town home like community (they aren't connected though, so not a true town home) in the middle of Houston and built in 2017.  It's a gentrifying area, but directly next to a very nice area (The Heights for fellow Houstonians).  It is currently managed through Mynd, which I would like to change at the very least.  

Here are some of the monthly numbers:

Rent: $2450

Mortgage: $1161.48

Property Tax: $645

Home Insurance: $216.50

Property management: $139

Repair Savings: $73.50 

Vacancy: $122.50

Capital Expenditure: $182.75

Monthly Cash Flow: -$90.73

Here are my options:

1) Sell and re-invest the money.  This is the last year I can use the 2-out-of-5 years rule since I lived there 2 years ago, so there would be a tax advantage for selling now. I am a little worried about how long it would take considering it's feels like sort of a dime a dozen in the area.

2) My tenant is great right now (according to my old neighbors) and is up for renewal in April.  If they renew, I was thinking about making a deal with a realtor who said she would place tenants for me for 1 month rent and give me her contact lists (she has been in the industry for a very long time).  I would property manage the rest and/or find an hourly on-site manager.  My concern is distance from the rental and limited time I have right now, but like I said, the tenant is great so if they renew I do not think they would take up too much time. Also, the realtor is older and seems close to retirement. This would put the monthly cash flow slightly positive given that the tenants she places a long term.

3) Just find a different property manager

4) Try a STR management company. It is in an ideal area, 3 bedrooms, 3 parking spots (other similar homes nearby only have 2 garage parking spots).

Thoughts?

[Stephanie Medina]

Quote from @Jaron Walling:

@Stephanie Medina After reading your post it looks like you're factoring 15% for expenses, but property management is only 5% of rent. That's incredibly cheap for PM. You said you want to change PM at the very least. Most PM companies I know charge 8-12% of rent. If that's the case in your market this property would cost YOU more out of pocket. Unless it's behind market rate rents or we're missing details why hold this property?? 

I think you answered the big question on your own. You can sell tax free (2/5 year rule) and deploy that money into something else. If you search hard enough you'll find cash-flow or break even rental property. This may require some creativity or rehab and ReFi (BRRRR?) but it's still possible in today's market.

 Thank you for the reply!  My biggest issue with the property management company is not even the monthly cost, it's the cost of repairs.  They charge a premium for stuff I've gotten quoted a lot less for, and they are a little difficult if I want to send my own people in.  But on that note, I have had a few quotes at closer to $100