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Updated about 9 years ago,
Should I keep my duplex?
Folks,
I own a duplex in the US and I just moved out of it to Toronto for a 10 month work assignment. I'd like to keep my duplex as an investment property and stay up here for the time being, but I'm having a hard time figuring out if the duplex is really worth it. I spent so much of time and money fixing it up that it might cloud my judgement. I'd really appreciate some level-headed advice!
Currently, the building's mortgage, taxes, and insurance run $1350/month. The building is generating a total of $2220/month, after deducting the fees of a good management company. I think I'm charging a bit less than I could rent-wise. General maintenance ought to run me about $2500/year, which is more than 1% of the building's value, but I figure it was built in 1900 and I ought to be be conservative about that.
Here's the problem: the building really needs an expensive new roof. Like, this year. The middle estimate came in at $17,000. For lots on convoluted reasons, I presently have no cash for this necessary repair. My LTV is about 80%, so I don't think I can use the building as collateral on a loan, especially now that I don't live there and can't get a home equity loan (according to my bank - I didn't expect that problem). I have no obvious source of equity. I do have excellent credit, at least.
So I could get the money for a roof, but it would be a real stretch. I'd have to borrow it as an unsecured loan at a very high rate, take it from my 401(k), or otherwise really stretch to make it work. But I could do it.
Question: would YOU stretch to make it work? At first glance, it seems like it makes a nice cash flow. My mortgage rate is really cheap. But I don't really know.
Thanks for any advice y'all pros might have.
~JP