Struggling to Fund Constant Repairs

[Nick L.]

Me and my wife just bought our first rental property last month and have gotten to the point of putting a tenant in place already. Unfortunately within a week of moving in we are getting hit with a work order of ~$3000 for heating damper issues with the HVAC system causing the heating not to be balanced well throughout the bottom floor of the home. This was after already putting in roughly 12k into minor rehab to take care of some TLC and mostly cosmetic items like replacing the flooring, interior paint, blinds, etc..

Should we continue down this path of waiting for the tenant to bring up the issue and throw in some more money eventually turning it into a money pit and taking a loss on this property since we are bound to a 1 year lease? What happens if you reach a point where you either cant afford to pay for more repairs or are unwilling/unable to take on a loan to carry out those repairs?

[Mark Cruse]

Not sure I'm fully understanding the scope of the situation. When you say take a loss on the property do you mean abandoning it or throwing out the tenant? From what you have presented here so far, if there is nothing else then neither makes any sense. You want to make some kind of move over having to pay for a repair? If you are going to be in this business, as long as you are in it, you continuously make repairs on a routine basis. If you HVAC isnt working you have to fix it. If you let this go, get another and face the same thing what will you do? If you are attempting to take a loss by evicting the tenant you may take a very big loss there. Not only do you lose the cash flow but  you may get sued depending on what jurisdiction you are in. Thus far, I see no grounds for breaking a lease. No matter what the approach is, for this business you got to have the appropriate mindset. If you are uneasy with making repairs or responding to maintenance requests clearly this is not for you. There are times when things go great and you may not have any issues. There are times when the sht hits the fan and you think you are drowning. Unless there is a lot more, from what you just described here there's no grounds to do much. Just hang in there.  First, verify if 3k worth of repair is necessary. Second, you are going to have to build up some kind of reserves or line of credit for maintenance. It's impossible to do this if you cannot address repairs or maintenance. It NEVER STOPS. This is a very rough business especially when starting out. However, you have a lot of people here to help you. I have been doing this a while. I wish I had something like this when my boots first hit the ground. Good luck and congratulations for jumping in.