Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 7 years ago on . Most recent reply

User Stats

13
Posts
1
Votes
Wesley Clark
  • West Deptford, NJ
1
Votes |
13
Posts

Correcting my own mistake

Wesley Clark
  • West Deptford, NJ
Posted

Hello BP!

I fell into land lording a few years ago when I moved out of a duplex I purchased due to job relocation.  I now own a duplex out of state and have recently purchased my primary residence.

Basically I purchased a duplex with little to no money down with a VA loan. I purchased it in 2008 for $154k, it is now valued at around $135K which is roughly the exact amount remaining on the principal. The rents total $1,500 a month with an escrowed mortgage of $1,350. However - due to my inexperience I have been paying the water for the tenants and have not raised the rents in several years. Additionally I have been relying on family to do the property management which I would ideally like to avoid. Essentially the property is cash flowing negative as property management, water and capital fund are only covered by $150/month.

Due to my now feverish appetite to get into buy and hold properties (thank you BP podcasts and books) I would like to get my act together and be a move active landlord.

Last year i purchased my primary home for $290k and have a conventional loan with capital invested in the down payment.

So that being said I see a few different options and was hoping for some advice. 

1.  Start charging the tenants for water

2.  Raise the rents incrementally annually 

3. Refinance my VA loan to restart the amortization schedule and reduce my monthly payment. I would think this would at least make the property neutral or start to cash flow. With incremental rents it could eventually work...

4. Sell the rental home to free up my VA loan - and refinance out of the traditional loan on my primary residence into a VA loan. I'm not sure if this is a viable option and if so - if i were able to pull out any of my capital.

REALLY appreciate anyone's assistance and I want to get going in the right direction on multifamily deals that positively cash flow.

-Wes

Most Popular Reply

User Stats

9,821
Posts
15,765
Votes
JD Martin
Property Manager
Pro Member
  • Rock Star Extraordinaire
  • Northeast, TN
15,765
Votes |
9,821
Posts
JD Martin
Property Manager
Pro Member
  • Rock Star Extraordinaire
  • Northeast, TN
ModeratorReplied

Well, the first (and most important) question is: how do the rents charged compare to fair market value? If you're grossly undercharging, it doesn't much matter that the property is a wash at this point if it can generate significant cash flow. If, however, it's already rented at/near market, then it appears to be an obvious loser, in which case your most prudent move is probably to hit the reset button and sell. 

One thing that's very difficult for investors/would-be investors is not letting the psychology of past decisions govern future decisions. It's why people who end up $200 down at the roulette table end up blowing 2 grand. If the money is lost, it's lost, and if the prospects for recovering it are very low, it's usually smarter to play to the future than continue to try milking funds from a dry cow. 

business profile image
Skyline Properties

Loading replies...