I'm getting my butt kicked

[Nic S.]

I grossly underestimated maintenance and make ready costs for my KCMO portfolio. Operating costs are through the roof and net income is non-existent in my first year of business. 

I started with 2 SFH turnkeys which have performed well but then I bought 3 duplexes that are crushing my cash flow. All properties had a 3rd party inspection but between evictions, capex costs, and turnover costs my business will be losing money in 2020.

I think I scaled too quickly. 1 unit total in 2019, 7 more in 2020 for a total of 8 in <12months. I underestimated the amount of reserves I'll need to ensure my portfolio pays for itself. 7 of the 8 properties exceed the 1% rule and appreciation is happening in KCMO. 

I keep telling myself its 'a long game' but it sure feels like I'm doing something wrong. 

I'm on writing this to share my personal experience, these are fantastic lessons I'm learning but it wasn't how I envisioned year 1 going. 

[Mark Cruse]

I have absolutely have no idea why people are suggesting you sell the properties because you are running into issues that´s merely part of business. You inherited bad tenants; get some good ones. If once all the rehabbing is complete and you will be making decent cash flow, it can be profitable for the next few years. If you do things right you may be able to recoup everything in a reasonable time frame.  There are very few landlords who have never had a losing year so telling you to sell when you hit rough waters makes no sense. You sell when there is no potential to be any better and losses are indefinite.  Selling right now you lose all the thousands you have put into it which compounds what you have already lost. It does sound like you expanded too fast but you are in  so buckle down and fix it. If 5 years from now you have a stable  = portfolio and your cash flow is through the roof you will be damn happy you didn´t take sell advice. In business things are not always pretty and this is hard but to me it seems like you have the ability and drive to make this into a winner!  I have been down this road so I´m speaking from experience.........