My first SFH is a hell house

[Zach Adams]

So the first house I ever bought, which became my first rental almost 3 years ago, is becoming a problem child. Stats: 1955 brick ranch in North Atlanta. B neighborhood. The house has a lot of character and I even leased it to a movie company for 2 months for them to film in! I have a lot of sweat equity in it as well for the years I owned. Valued at $165k and I have about $55k equity. Rent $1265 and PITI is $706. There is a full service pm (maintenance as well as tenant screening and search). I'm hands off. 2 issues: one I can't keep the property cash flowing. I haven't had back to back cash flow months since last summer. Second is vacancy which is a recent occurrence. 2013 wasn't a bad year if I recall but last year I put a new bathroom in as a result of a leak and rotting floors and I did a new roof. Both I knew were issues from owning it. Then to start the year the hot water heater went out. Also in December the long term tenants left. The PM (who takes first month of new lease/tenant) got the place rented and I found out yesterday they're moving out. Aggggghhh!!!! I told the PM I'm not paying for him to put another tenant in there. He said he'd take out his profit if I'd cover is search/marketing expenses. I'm probably going to be ok with this and we will have to discuss. The place usually has a good list of potential renters when it hits the market. Also I know this year the HVaC is an issue. I feel like I'm in a protracted rehab. The tax benefits from all the write offs last year made up for the lost cash flow. But still I'm attached to the property and it's being a pain right now. I could sell it and 1031 into a MFH, but not sure if I should just weather the storm. Looking for similar stories and what you did. At some point the CapEx has to slow down, right??!? I thought I was a buy and hold guy looking for good cash flow and moderate appreciation. Not sure right now... Thanks for any feedback Zach

[Lee G.]

Zach,

I had similar feelings about my first rental 4 years ago with several cap expenditures and two rounds of bad tenants in about a 18 months span.  However with patience, my luck turned around now that I've had the same tenant 3 years and counting and on two occasions they have been the ones to ask me to sign a new one yeas lease after the old lease expires.  Since putting a new HVAc unit in 2012, my expenses have been less than $300 for 3 straight years.  I think brighter days may be ahead of you.