Lemon or no?

Question

I have a confession: my only duplex, which I gave owned now for 2 years and recently moved out of from a house hack, has proven to cost me more to maintain/pay taxes/repair/fix etc to the point where my cash flow is close to zero. Reason being, I hired a property management company (just now) and they're wonderful, they start officially in a couple days. But is this going to be worth it? I've had so much emotional and financial stress from this house after I moved out (mostly from a mean and very demanding tenant). They take decent care of the property, but I would get texts all the time telling me to fix many things (some valid, some completely unnecessary) and would get upset if I ever denied any of the requests. Well, we are getting into the cold months and without going into too much detail, it's become extremely scary to talk with them and try and amicably handle requests. The house is in very good shape, but not perfect, it was built in 1959.

I guess my question is this: is the very low cash flow (due to my low down-payment and high interest) going to improve? Or when is the time to throw in the towel? I've dealt with so much stress. Am I not cut out for this? I'm trying to do the right thing each time and feel like I'm being abused. I hope management works, but taxes are flying, insurance is flying, and I just wonder if I made a mistake with this property.

anyway, sorry for the rant...

I guess my question is this: is the very low cash flow (due to my low down-payment and high interest) going to improve? Or when is the time to throw in the towel? I've dealt with so much stress. Am I not cut out for this? I'm trying to do the right thing each time and feel like I'm being abused. I hope management works, but taxes are flying, insurance is flying, and I just wonder if I made a mistake with this property.

anyway, sorry for the rant...

Drew Sygit · Answer

@Daniel Windingstad congrats!

You've learned:

1) The basics of landlording

2) That it's not for you

Now, how can you apply your landlording knowledge to "manage your manager"?

Do NOT assume they know everything. Yes, they will do many things better than you, but some things it's not possible for them to be as attentive and quick responding as you.

Also, no one's perfect, so keep tabs on them in general.

Regarding holding or selling: why did you buy this in the first place?

Value and rents should eventually increase to turn cashflow positive and build your wealth.

You're next learning experience will be, now that you are out of day-to-day management, how will you be able to handle the inevitable expense challenges? Will you "freak out" when you have to write a check for maintenance or eviction?

The next 3-9 months will tell you...

Obed Calixte · Answer

Some people have the personality, processes and systems & time to self manage, some do not. It is good to know which camp you are in.

It sounds like a prudent choice to bring in a property manager. Assuming they are professional and skilled in the craft - alot of the issues you have faced, they will remediate and mitigate moving forward. That will help you garner a better picture on if holding this property longer is a fit for you.

Obed Calixte · Answer

It will help. Now, don't let having a property manager keep you from learning the ins and out of managing a property. You also will still need to manage your property manager  - ie, stay on top of expenses, ensuring your property is being managed effectively etc.

Those are much easier to do than having to deal with a difficult tenant daily however.

Bruce Woodruff · Answer

There is another consideration besides monthly CF. If you think/know that the proeprty is going to appreciate like crazy over the next few years, then it's worth keeping.....

Benjamin Aaker · Answer

Sounds like a problem with setting expectations. What do you have in your lease about repair requests? You should have a system for how the tenant puts in a request and what may be requested. A light bulb replacement, for instance, might be the responsibility of the tenant. If there is something going on that is making you fearful then you may want to get law enforcement involved. Threatening each others' safety is never allowed.

Looks like you made a good decision with property management. You'll have to look at the income and expenses to predict whether your cash flow will improve. It probably will with good management in place. Feel confident turning over management. If it doesn't work, put it up for sale when the lease ends.

Benjamin Aaker · Answer

Sounds like a problem with setting expectations. What do you have in your lease about repair requests? You should have a system for how the tenant puts in a request and what may be requested. A light bulb replacement, for instance, might be the responsibility of the tenant. If there is something going on that is making you fearful then you may want to get law enforcement involved. Threatening each others' safety is never allowed.

Looks like you made a good decision with property management. You'll have to look at the income and expenses to predict whether your cash flow will improve. It probably will with good management in place. Feel confident turning over management. If it doesn't work, put it up for sale when the lease ends.

Lemon or no?

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