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Updated about 2 years ago on . Most recent reply
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To Fix or To Sell (or Both)
Hi Everyone,
I am looking to see if anyone is able to offer any advice on my current situation. Any help would be greatly appreciated!
I currently reside in Chicago and bought my first property, a duplex, in August 2021 in Euclid, OH that was built in 1920. At purchase, there was one inherited tenant in the upstairs unit while the downstairs unit was vacant. We were able to get the downstairs unit fixed up while the upstairs was rented out at $750/month. When both units were rented, total income came out to $1590/month with PITI at around $800/month.
Recently, I have had a lot of issues with the property. A water leak from the upstairs into the downstairs unit ended up costing me $3850 as there was damage to the wall and flooring. The downstairs tenant moved out early in November due to this. There was some damage to the interior from the tenant and some repairs that needed to be done that totaled over $4500. In a separate incident, the hot water heater broke and it was $1600 to replace it. The inherited tenant stopped paying and did not pay for the last 3-4 months of 2022 after we had chosen not to renew her MTM lease. My property manager had to file an eviction and she finally moved out in late December. Unfortunately, she has caused quite a bit of damage - the kids had drawn and painted on many of the doors and walls in the house (sometimes the whole wall), there is a broken window or two, some wall damage, and she left piles of clothes and bed frames for us to deal with. There are some other repairs that needed to be done when the property was purchased that we did not have the chance to do since it was occupied but this tenant definitely caused a significant amount of damage. My PM is quoting me $14k for all the repairs. I have put a lot of money into repairs recently and it has been frustrating to deal with this over the past few months. My PM has been very slow to move at times and it has taken a while to get some repairs started.
I am working on filing a claim with my insurance to see if they will help with the water damage bill and also the most recently needed repairs with the tenant causing damage. Hopefully that will pan out but I am not sure how much will be covered and if it will work out. I am not sure if it is worth putting in this money into this house, as it is older and may continue to need regular repairs along with potentially sustaining more significant tenant-caused damage. My PM has been difficult to work with at times and communication has been pretty poor at times.
At this point, I am thinking of trying to do some repairs and selling it. This property has caused a lot of headaches! Redfin and Realtor.com estimate the value at $133k. If insurance doesn't come through for me, I may consider doing some repairs and selling at a lower price.
This has been very challenging for me. I wanted to see what other people think about this situation and what they would do in my shoes. Any advice would be greatly appreciated!
Thanks!
-Andrew
Most Popular Reply
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Quote from @Andrew Dudun:
Hi Everyone,
I am looking to see if anyone is able to offer any advice on my current situation. Any help would be greatly appreciated!
I currently reside in Chicago and bought my first property, a duplex, in August 2021 in Euclid, OH that was built in 1920. At purchase, there was one inherited tenant in the upstairs unit while the downstairs unit was vacant. We were able to get the downstairs unit fixed up while the upstairs was rented out at $750/month. When both units were rented, total income came out to $1590/month with PITI at around $800/month.
Recently, I have had a lot of issues with the property. A water leak from the upstairs into the downstairs unit ended up costing me $3850 as there was damage to the wall and flooring. The downstairs tenant moved out early in November due to this. There was some damage to the interior from the tenant and some repairs that needed to be done that totaled over $4500. In a separate incident, the hot water heater broke and it was $1600 to replace it. The inherited tenant stopped paying and did not pay for the last 3-4 months of 2022 after we had chosen not to renew her MTM lease. My property manager had to file an eviction and she finally moved out in late December. Unfortunately, she has caused quite a bit of damage - the kids had drawn and painted on many of the doors and walls in the house (sometimes the whole wall), there is a broken window or two, some wall damage, and she left piles of clothes and bed frames for us to deal with. There are some other repairs that needed to be done when the property was purchased that we did not have the chance to do since it was occupied but this tenant definitely caused a significant amount of damage. My PM is quoting me $14k for all the repairs. I have put a lot of money into repairs recently and it has been frustrating to deal with this over the past few months. My PM has been very slow to move at times and it has taken a while to get some repairs started.
I am working on filing a claim with my insurance to see if they will help with the water damage bill and also the most recently needed repairs with the tenant causing damage. Hopefully that will pan out but I am not sure how much will be covered and if it will work out. I am not sure if it is worth putting in this money into this house, as it is older and may continue to need regular repairs along with potentially sustaining more significant tenant-caused damage. My PM has been difficult to work with at times and communication has been pretty poor at times.
At this point, I am thinking of trying to do some repairs and selling it. This property has caused a lot of headaches! Redfin and Realtor.com estimate the value at $133k. If insurance doesn't come through for me, I may consider doing some repairs and selling at a lower price.
This has been very challenging for me. I wanted to see what other people think about this situation and what they would do in my shoes. Any advice would be greatly appreciated!
Thanks!
-Andrew
Repairs are going to happen, and tenants will damage things… but I would pin more of your issues on the disadvantages of remote investing and having to use a PM. PMs have little to no incentive to save you money or choose vendors who will try and help save you money. I would bet the farm if you were on site and reached out to a qualified (but more affordable) handyman that your repair costs would be less than half of what you are being quoted.
My example of this was when my (now) wife was using PM and they wanted $800 to replace a broken garage door opener. I told her that was a ridiculous price and we went and bought the opener and replaced it for $150 plus 2 hours of our time. But had we been remote, and relied on the PM we would have likely had little choice than to pay 4x more. Even if I had hired a handyman versus doing it ourselves I think we would have saved half off their quote.
For instance, are they quoting replacing the doors the tenant drew on, or painting them? A gallon of paint and a handyman for several hours might save you thousands of dollars over replacing multiple doors & door frames. We pay no more than about $700 to replace a hot water heater… about $400-500 for the heater from Home Depot, and our local plumbing company takes about 2 hours to install it at $125/hour.
It sounds like you are being given very high quotes for repairs to me. It’s not unheard of for PM’s to mark up the services of their vendors. I would investigate what you are being charged by getting a quote from a handyman local to your property. See what a competing quote looks like compared to what your PM is getting you. Bet you will be surprised (and mad at your PM)!
ALl the best!
Randy