Buy or Sell Cash-Flowing Property That Needs $30k Repair

[Allison Ault]

This is my first time posting to Bigger Pockets! So excited to use this resource. I read a book by Bigger Pockets 3 years ago on out-of-state investing and bought my first out-of-state investment property halfway through the book. I bought a house only a mother could love in a downtown neighborhood of Oklahoma City. 5 blocks away there is a "district" with clothing boutiques, trendy restaurants, breweries, and wine bars. The neighborhood itself is still run-down, but less rough than it was 15 years ago and there have been 4 fix-and-flips on the block since I purchased it. It overlooks a park where there will never be any development in front of it. I put $62k into the rehab plus a $25k downpayment into the 2bd/2ba with a 1ba/1ba unit in back (separate entrance). I officially licensed the back unit as a short-term rental and rent it out on Airbnb and it has at 4.9 rating.

My question is regarding whether or not to keep it based on a major repair that needs to happen. The roof needs to be reframed and redone and the entire job will cost me $30k. I've had multiple contractors come out to look at it. There is a mold issue occurring in the main house utility room do to a shoddy roof job where the second unit was added. I slapped on some gaco roofing stuff where I think there might be a leak and cleaned up the mold in October, but the addition is such a patchwork job that I don't know if it's going to be much of a fix. My current tenant has complained about an allergy - I have mold allergies too - and I do want to make sure I have a healthy place for tenants to live.

Do I sell or do I keep it? Here are the numbers: Main 2bd/2ba - $1200/mo. Airbhb unit 1ba/1bd - $2200/mo ave throughout the year. Total ave revenue $3400/mo. Mortgage payment plus airbnb utilities $950/mo. Profit before what I set aside for 25% running a rental (15% vacancy for the neighborhood, estimated maintenance, etc.) = $1837/mo. Again, I put $62k in with $25k down. The mortgage due is $110k and it appraised $12k over what I bought it for before I put anything into it. The roof/reframing job ($30k) won't add value, just mitigate the mold and future issues. And, from, what I've read, I only get a 50% return on the roof investment when selling. The property is already in the top 75 percentile of rent in the neighborhood, so I don't think I can raise it much more. 

What are your thoughts?