Keep or Sell my negative Cash Flow rental

[Gani Veer]

Hello BP members,

I am a new member to BP, and this is my first post. I have a question regarding a rental property in Chicago with below details? It is currently yielding negative cash flow. I am holding this property for about 10 years now, in good location easy to locate tenants. Unfortunately it has negative cash flow that I am being fed up with, although some of the money is going into principal.

Purchase P: $205,000

Rent: $1550 - $1600

Loan Balance: $120,000

Interest rate: 3.25%

Matures in : 10 years

Insurance: $20/month

Prop Tax: $330/month

Condo Association Fees:  $445/month

Negative Cash Flow: ~ $430/month not counting vacancies/realtor commission to find new tenants/repairs etc.

I have about $800 going to principal and the load will mature in about 10 years. I have an investor willing buy it for cash around $200K. 

Shall I sell the property for a loss and buy possibly a one or multi-unit properties that will yield positive cash flow, even though at a higher interest than my current ultra low interest rate. 

Another possibility is look for a partner to get some cash out and split the cash flow as well. If so how shall I go about structuring a partnership deal. Your analysis and guidance will be much appreciated.

Thanks,

Gani

[Joe Villeneuve]

I'd of sold it 10 years ago.  No wait, I wouldn't have bought it in the first place.  Sell it yesterday...if not sooner.  It's bleeding you dry.

Let's see now:

*   -   $430/month ===> $5,160 a year...in losses (cash losses...the worst kind)

*   -   $1,550/year...assuming an average of 1 month of vacancy/year.

** -    $6,710/year in losses (cash...out of pocket)
***- $67,710 TOTAL LOSSES (Cash) over 10 year period

*    $200,000 Sold to potential Investor

* -  $120,000 loan balance

* -     $25,000 Closing costs

* -      67,710 Losses from negative CF
** $212,710  TOTAL LOSSES

Net Loss after sale of $12,710

...and before you say, in the future....(blah, blah, blah...), the longer you wait to get this albatross off of your back, the more the losses build up, and the longer it takes you to break even and start making a profit.

You can always get your money back, as long as you stay in the game.

Get rid of this property.  The longer it takes you to get rid of it, the less you have to play with when you get back in the game.