Looking for Perspective/Advice/Thoughts

[Mikhil M Patel]

Hello, I'm new to the community. I've been reading other posts and the community is so helpful, I thought I would post my scenario and see if others had any perspective or advice to offer.

I bought my first home in Missouri and lived in it for two years. Ten months ago I relocated for work, but kept the MO property and now use it as a rental property (lower rental income than I'd prefer, but since first time rental, wanted to ensure signing tenants).

I bought my second home in Delaware (relocation). I was up against a hard date to relocate, dwindling time in corporate housing and warehouse storage, and not many options in the housing market at the time to choose from. I found a house, of which at the time I fell for the character, general layout, and prospect of growth. Since then, the blinders have come off and am noticing higher than average costs on maintenance and utilities (house is 110+ years old), along with it being way more house than needed. Most of this I knew going in, but the magnitude I'm encountering I didn't exactly plan for.

Woke up in a panic last night thinking about all the things. With a house this old, there's inevitably something that will go wrong each year (which could happen with any home, new or old). My partner is also planning to go back to school in Summer 2019, which means her secondary income will be gone. The MO property effectively breaks even with the rental income (net loss of ~$100). The DE property's mortgage is nearly covered with the relocation package's dual housing stipend from my company (only lasts as long as the company relocation contract does), but lately the utilities and maintenance have skyrocketed all while still working to pay off student loans and other various expenses. My fear is my DTI will be excessive in a year or two once 1) my partner's "rent" is gone due to her going back to school, 2) company perks run out, and 3) if I cannot keep tenants in the MO rental property. My partner and I have kept our financials separate so I look at everything from self-sustainability. Also, in two or three years, when my company contract is up, there's no guarantee I stay in DE. Could end up relocating to another state or what-have-you.

My MO house plan is to raise the rental income slowly to start earning a profit in that space. However, with the DE home, I'm curious if it makes more sense to gut out the potential maintenance and utility concerns with the current home, and when relocation contract is up, make a decision to sell or flip to rental property (would have to add a second full bath to attract tenants) or if I should start looking for another house now that's cheaper, fits my family's needs more, and look at the next two years after moving to save the delta of what I'm currently paying in DE for long-term retirement (or other investments). 

Thanks to those who took the time to read through this! Any advice, suggestions, or thoughts is appreciated!

[Stone Jin]

Sounds like if murphy's law strikes you would be in significant distress.  I think both houses are probably going to lose money in the long run.  If you are negative cashflow now in MO, you likely will continue to be negative cashflow for the foreseeable future.  At some point a roof or AC will wipe out years of cashflow.  

I would think the DE house is going to cost dearly as things break as everything is over 100 years old.  

If I was in your position, I'd probably look to sell both properties and buy something that you could easily afford on just 1 salary.  I would then focus energy on finding rentals that are purposefully rentals and not just houses you live in throughout the years in various geo's.  I've always been thought that cashflow pays the bills.