When to sell a bad rental

[Tim Bee]

I have a rental where market rent for this SFR is around $2000/mo. It's been vacant since June. That's puts it vacant for about 4 months now. I started advertising it at $2100 and steadily lowered it to now $1700. I've gotten a few bites and some apps but mostly dead beats with evictions and bad rental history. Should I keep going lower or should I sell. It's all paid off but rates are high so I'm not thinking re-fi at this time. Purchase price was around 215K with rehab at about 25K. It's probably worth about 290K now. It was rented for 3 years for $2150 and then became vacant 4 months ago. Thoughts??? Thanks!

[Bill B.]

Personally I would hire a PM. You’ve already paid more in vacancy than they will charge you to run it for you. They will either tell you that your $2,100 was unrealistic, or do a better job of advertising and screening and get it filled for more than $1,700. Either way you bring in more money for doing less work. 

I would have said you are “literally paying to be a PM.”  But you obviously aren’t literally paying. You are just making less than if you used one while doing more work. I don’t know your market, but for me 2 weeks is a long vacancy. So you’ve lost 33% because of vacancy and now you’re trying to lose another 20% to lower rent.  You’re going to try to make 8 x $1,700 = $13,600 when you would have made between 11 x $2,100 minus 8% = $21,252 or 11 x $1,700 minus 8% = $17,204. 

Stop the bleeding and hire a professional. It’s your pricing, or your advertising. (Location of ads or quality of ads/photos.) There’s not much else it can be unless it’s in really bad physical condition, which the PM would also notice right away. 

Good luck.