Newbie (3 doors) Needs a Pep Talk

[Fran Pratt]

Ya'll. I need a pep talk. I started investing this past fall and my start has been ROUGH. I'm discouraged, and I don't need tough love - I'm hard enough on myself as it is. I really don't even need advice. I just need to hear some stories from people who have been through similar seasons and come out the other side still wanting to own real estate. 

I purchased my first rental property - a newer home in a high-appreciation market and neighborhood - with a business partner, and she and I have had the hardest time getting it rented. Our town has a small university, and we have been marketing it furnished to students. It's a HCOL area and long-term rentals are not profitable at current interest rates, which is why we went this route.  My partner is a savvy realtor and despite both of our best efforts, we have yet to see a cash flow positive month since we listed it in January. We are working the problem; it's just discouraging. 

My other property which I purchased around the same time is in a nearby town, also high appreciation market. An older (60's) remodeled home I bought via New Western for $223 that has a current tenant who pays $1650/mo; it has an apartment above a detached garage that was billed as needing "$10k in repairs to get to top of market rent." Top of market being around $900-1k/mo. I thought I was being conservative when I estimated the apartment would take $25k to get in order. But no. Turns out the structure is significantly older (1930's) than the main house - this was not disclosed - and it ended up needing more like $55k of work done. Which I have done. it. all.

To top that all off, the insurance company made me put a new roof on both structures (I think the roof had a bit of life left in it, but ok) - another $11k - and the main house needs around $6k worth of electrical that the previous owner didn't do properly ("fully remodeled" my ***). So I'm in for over $70k, which means I'm completely underwater in terms of what the property is worth (which, you guessed it, is currently around what I originally paid. ugh.). I haven't even financed it yet - I've been doing a BRRR strategy which is clearly failing. I've made mistakes, which I try not to beat myself up about and sometimes succeed. Oh, and my insurance agent is telling me my premiums are likely going to double once I rent out the apartment - fun times (Yes we are shopping that around).

At this point my only hope is to run the apartment as a mid-term, which I think is a viable strategy here; so I have furnished it (more $) and made it pretty. I happen to be good at creating inviting spaces. Hoping I can get around $1200 renting to traveling nurses and professionals According to my research on FurnishedFinder, this is reasonable, and I'm planning to list June 1. My other only hope is long-term appreciation. I won't be able to get my money out of it any other way. I guess the good news is I won't have to pay taxes bc LOSSES. 

Anyway, if you read all this: thanks. Tell me how you overcame adversity and it all worked out in the end.