Need advice on first investment property

[Justin Yi]

Hello To everyone on BP!

This is my second post, and since the last time my wife and I bought our first investment property in Boerne TX 78015 (NW of downtown San Antonio). We are active duty, been in our home for a little over a month, but are expected to move within the next 6-9 months.

Mortgage is $2700 and right now we are kind of worried about whether or not we’ll be able to cash flow or even break even at all. There was always some hesitation when it came to buying this home. Despite it being in good neighborhood with good school districts; there were very few homes in the area to compare rent figures with and same with the selling prices. My agent said that it was because the neighborhood is very new and that normally rentals in the area get snatched up quickly and get moved off the market.

I’ve been looking at Zillow for the past year (took 8 months to build), keeping an eye on the rental market around my area but I’m hardly ever seeing homes with the same bedrooms/bath and sq footage that rent for $2700+. The ones that do show up stay on the market for 45 days + or just get taken off.

I used a VA loan with 0 down. We finished the flooring and plan to update kitchen counter top and cabinets. However, the master bathroom is basic. We're already 10k in with the flooring and irrigation.

What are my options? When closing the home was appraised 40k more than what I paid for. Not sure how accurate that is. My realtor tells me, even if I am neg. cash flow I should hold it and think of it as a savings account and pay out the difference to keep it as a rental. And that I’ll have a lot of tax benefits. Also not sure how that works, waiting to speak to a cpa.

I hope I provided enough information and would appreciate any advice or thoughts on how to tackle this situation. Thank you!!

[Joe Villeneuve]

First, you REA is (I'm trying to be nice here) not working with a full deck.  None of what he/she said was close to being accurate.  Especially the "savings account" remark.  Negative cash flow adds to your cost.  It's NOT in any way a "savings account" (this is where I have to bite my tongue)!!!  If he/she says all that you mentioned, I would be very concerned about the accuracy of anything else he/she said.

Try Rentometer to find rental comps.  If you're not sure if it will cash flow, then calculate it out:  Take the rent and subtract the monthly insurance, taxes, mortgage Pmt and what is left is your cash flow, positive or negative.  It it's positive you can hold it, if it's negative then sell it.