First Tenant..Operating at a loss.

[Bruno Mauro]

Hey all,

I bought my first property a 2BR/2BA In April of last year (before I found BP or how to calculate cash-flowing properties), been living in it until about  a month and a half ago. I'm moving out of the country at the end of the year to study abroad, and found a property management company to take care of things.

Got a tenant in place already, here's the breakdown:

Rental Property Cost Breakdown

Mortgage/Insurance/Taxes/Escrow: 1215.35

Property Management: 137.5

HOA Fees: 366.56

Total Cost: 1719.41

Rental Income: 1650

Loss:69.41

This isn't even calculating maintenance costs...

In the second year, if my tenant renews I get a 35% discount on my management fees.

What is my best course of action at this point?

I know I can deduct passive rental property losses form my active income (I make less than 100k)

Some other info:

-I have about $15k in reserves

-Next year I won't be working in the States, or for an American company, but I will be receiving a W-2, but can offset those taxes due to the following:

• "The Foreign Earned Income Exclusion, which allows you to exclude $105,900 from your foreign earned income on your 2019 US taxes and $107,600 on your 2020 US taxes
• The Foreign Tax Credit allows you to offset, dollar-for-dollar, the taxes you paid in your host country with your US taxes
• A Foreign Housing Exclusion which allows an additional exclusion from income on US taxes for certain amounts paid for household expenses that occur as a consequence of living abroad"

-I'm a single guy with no family, so my lifestyle is pretty flexible.

If you need any more info, please just ask! 

Thanks.

[Colleen F.]

What would it sell for?  After costs I expect you lose money too?  You will still be at a loss next year or perhaps break even but no capex.  The thing that might make it worth keeping is if it is appreciating and rents are increasing or if you will you return to this area in a few years and live there. 

The only way to make more money is decrease cost or increase income. I don't think you can decrease mortgage by refinancing cheaper because you now have an owner occupied loan. I don't see you being able to increase rent by airbnb in an HOA even if it is suitable location so your option is to raise rent at renewal.