Bought a bad deal and am thinking of exiting early.

[Robert Tucker]

Ok. So I bought a house I was renting the lower half of because I didnt want to move again. This was before I started researching house hacking strategies. With it rented, the mortgage (PITI) is a little under 25% of my monthly income. Without the top floor rented, it's a little over 75%. The loan was my first VA home loan for $268000. Closing was 31 October 2019.

Question: Stay and rent it, or get out fast? I'm concerned about not being able to rent it steadily, and the financial burden during vacancies, which I have coming up in a month or so.

Would it be smarter to get out of it and buy a regular SF home that is about 25% of my monthly income, then save and look for a better deal?

If that's the case, what is the best way to get out of it so soon?

Thank you for any assistance. I wish I knew then what I knew now about getting and having systems in place before I bought this place.

Again, thanks for any advice.

[James Galla]

Originally posted by @Robert Tucker:

Ok. So I bought a house I was renting the lower half of because I didnt want to move again. This was before I started researching house hacking strategies. With it rented, the mortgage (PITI) is a little under 25% of my monthly income. Without the top floor rented, it's a little over 75%. The loan was my first VA home loan for $268000. Closing was 31 October 2019.

Question: Stay and rent it, or get out fast? I'm concerned about not being able to rent it steadily, and the financial burden during vacancies, which I have coming up in a month or so.

Would it be smarter to get out of it and buy a regular SF home that is about 25% of my monthly income, then save and look for a better deal?

If that's the case, what is the best way to get out of it so soon?

Thank you for any assistance. I wish I knew then what I knew now about getting and having systems in place before I bought this place.

Again, thanks for any advice.

Hello, unfortunately, every landlord experiences vacancies and other associated expenses with owning homes as assets. Building those liabilities into your budget is critical. I would consider whether this is a single-family or multifamily. I would also clarify what type of income we are talking about. Is PITI 75% of your rental income on that property when the top floor isn't rented? If so, that sounds much more different than if it is 75% of your income. If it is indeed 75% of your regular income, then I wonder how you survived the loan origination process beyond a review of debt to income.

If it is a single family property, you may be in for more work in attempting to fill vacancies. Typically, folks don't want long term stays when renting rooms or portions of a property not meant for individual use. In deciding whether you should pursue another property, you ought to do an analysis of what is available in your market. Otherwise, it's difficult to comment on what kind of position you are in. For now, you should work on your budgeting. The fact of an upcoming vacancy should have already been accounted for by setting money aside. On the plus side, now you'll reassess your budgeting and allocate funds to address those issues accordingly. Good luck with your market analysis.