Escrow shortage, so Mortgage going up to cover it, and losing cashflow on Rental Prop

[Alex S.]

Hello!  Realtor and Investor here.  I've got a rental that was a new construction in 2022, so no property tax was defined yet (based only on land value. First year was fine on property taxes, and we were cash flowing great.  2nd year the property taxes went up and not enough escrow was taken out by the lender, so now they're trying to catch that up and predict the current year, so mortgage essentially went up $1000 monthly, thus killing my $500/m cashflow and making me a $500/m loss.  

I have 2 other rentals that ideally can subsidize this, so, would I be better off holding onto it for the long haul and evening out eventually, or selling the property and getting something else?  

Rent = $1800/m (Now on month-to-month until they buy a house) - Market rent in the neighborhood is much lower now too, so if I rent again, it would be in the $1700 range.  

Mortgage all in was $1300

Mortgage for Apr 2024-Apr 2025 w/ additional escrow coverage = $2150.  

Appreciate any suggestions! 

[V.G Jason]

This is all par for the course. If these are the problems you're having in REI, you're not fit for REI.

This is why the cash flow only mechanism of investing will rear it's ugly head. You need to come more equipped, your best option right now is covering the short. But if this is the kind of stuff that gets you contemplating selling you should probably get less levered by consolidating properties or step out of REI. Highly leveraged, minimal cash flow as is, little cash reserves and yet you probably want your property to appreciate but don't want the tax & insurance to go up. Tell me how that's going to work.