Section 8 Disaster - to rehab or not

[Brandon Koser]

Hey everyone. Hoping for some advice/help. Have a property in a low income area that I bought with tenant in place under Section 8. Put up with her lack of care of the property for probably longer  than I should have because the guaranteed rate was making it worth it.

Well it finally got so bad we had to evict her after the last Section 8 inspection. Gained control recently. My contractor went out and said it would be $17k+ to make rentable again, even to Section 8. I had reserves but not this high. I can pay outright but it would all come out of personal accounts then.

Cash flow was good prior to this obviously but at such a high hit, I'm at a big disadvantage now.Still leveraged fairly high as it's been less than 2 years since purchase.

My question is what would you suggest I do? I don't think I could sell it without a larger loss but I haven't looked for offers yet, just informal market check. Could I file an insurance claim for this? I have a pretty good company in general (USAA) but I'm not sure how much they'd consider "cosmetic" and not pay and then raise my rates across the board anyway.

Any other ideas??

Thank you

[Dennis M.]

Call several local handymen and get quotes . Geez For 17 grand I could practically rebuild the unit from scratch . If your paying a guy 70$ an hour it’s no wonder your upside down on costs  . Get some local quotes you might be shocked . I’ve done almost gut jobs for half that in a 2 bed . You gotta fix it at this point . Do not sell even if it looks bleak because You won’t get crap for it in its current condition so just put your head down and keep moving forward . Success is stumbling through failure after failure without losing enthusiasm