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Updated almost 3 years ago on . Most recent reply

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16
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11
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Victor Baronich
  • Ocean Springs, MS
11
Votes |
16
Posts

Rental repairs wiping out profit

Victor Baronich
  • Ocean Springs, MS
Posted

Hi, I have been into rentals now for about 4 years.  We currently have 12 rentals, all sfh's.  What I am finding is that essentially we make no money and probably lose money slightly overall.  I was very careful when buying to cashflow at least $200/month after all expenses (most are over $300).   The problem is when a tenant leaves.  Often I am replacing floors, or painting/pressure washing, and other misc repairs.  And while it is quick to turn around and rent again, that 3-5k in repair costs kills the profit.  One unit needed a new AC, for example.  I am blessed to have family that does that so I got it replaced at wholesale, but it still wiped out a year or more of profit. 

I keep thinking all I have to do is buy more and more and eventually it will show profit.  But is that a reality?  I mean if I had 50, well then I have 50 roofs, 50 water heaters, 50 AC's, etc to maintain.  So do costs just adjust right along side cashflow?  

Since a kid I was taught the Robert Kiyosaki mentality of use debt and OPM.  So I don't pay for acquiring my rentals,  I have investors do that.  My responsibilities are the repair costs.  Maybe I should pay them off to open more cash flow, but that means sinking a ton of money into the business that could be doing something else. So is that really smart?

To those that have been doing it longer and maybe have more units, what have you found over the years?  Is there a breaking point where you have so many you start profiting?

Most Popular Reply

User Stats

15
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18
Votes
Mitchell Pudelski
  • Rental Property Investor
  • Wadsworth, OH
18
Votes |
15
Posts
Mitchell Pudelski
  • Rental Property Investor
  • Wadsworth, OH
Replied

@Victor Baronich

I didn't see anybody address what may be a common mistake. If you are experiencing high turnover with costly repairs it may be necessary to update/improve the units, raise the rent, and enjoy better tenants. They will usually stay long-term, pay on-time, appreciate your work, and not cause damage/cost you money. If you are operating at the lower end of the market, you will only attract the lower end of the Tenant pool.

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