What do I do with my Rental!!??

[Kyle Clevenger]

Hello BP!

I house-hacked my first rental by buying it as a primary residence first then upgraded into my new home after 2 years of living in the first one. We have now owned the new property and lived there for about 1 year. The house (Rental) was built in the '50s and there has been little upgrading throughout its life. When we lived there we had an incident with a tree and received a new roof covering the main portion of the house. The rest of the roof looks fine with little wear or damage. 

Now this is where things get tricky. I placed a tenant in the unit in a hurry to help me just cover the expenses while I was deployed, big mistake! they ended up not paying rent (for almost 5 months) and leaving me with some small repairs after they willingly moved out. When we got our new tenants picked out, they said they love the area and look forward to staying there for several years if possible, and with the new tenants we are cash-flowing about $450/ month... At least that's what it looks like on paper. On January 1 this year my well dried up, and because I was not collecting rent and bleeding money (not to mention earning about half as much income as I am used to Stateside) we borrowed money from my mom to replace the well ($10,000). She is very generous and not charging me interest and letting me make small payments to her. The next thing that happened was over Memorial Weekend, received a call saying the AC Condenser stopped working. I was able to leave base and go home to meet with a tech and they hit me with another nearly $10,000 quote. luckily I have a buddy who's in the field, and he said he is confident he can get it condenser working for at least this season. I hope this works! Then, while I was walking through the property, after not seeing it for over a year, the tenants pointed out bird nests and said they were hearing squeaks and little feet in the roof and walls... UGH! Well, I got a quote to remove the pests and seal the entrances for $2,850. 

Finally, I'll get to my question for you all.

With putting out close to $15,0000 for a rental property this year alone (and potentially another $10,000 for HVAC) should I hold on to it?

Cash flowing $450 is not too terrible in my opinion, but it seems like almost all of the major expenses are happening right now and it's hard to justify keeping the house when it only makes about $5,000 profit in one year. It will take us between 3 to 5 years to recoup the funds we spent on the house this year alone, and that means taking no profit. I aspire to get to 10 to 15 units in the next 5 years through more house-hacking and purchasing dedicated rentals, but it is very hard when this first rental is bleeding money. I have about $70,000 in equity (Maybe more or less) but I have a 3% interest rate. I was looking into a HELOC, but the first lender we talked to (my local credit union) said they would not count my rental as income for another year or two, and that put our DTI in a bad place (with 2 mortgages).

Any tips or advice you provide will be greatly appreciated and considered!

Thank you for reading.

Respectfully,

Kyle D. Clevenger