Strategizing rental home thats breaking even

[Jayson Manuel]

We have a home that is breaking even, our rent income covers the mortgage, but we want to know how we can make this investment cashflow or should we just sell it?

[James C.]

Jayson,

Have you calculated the value of the loss (depreciation) against income? It's not ideal, but every portfolio has some paper losses to cover the winners. Also, are you loosing money due to repairs/re-leasing, or is it strictly break even? 

Can you raise the rent? Can you make inexpensive improvements that add value? Can you refinance your mortgage (and lower your payment)? What has happened to the value of the property? Up, down, sideways?

If you can't do any of those things, and your value isn't going up, then dump it. Watch out for recapture, so you might want to consider a 1031 exchange if you do sell outright.

You could consider selling under a lease/purchase agreement, wrap/Sub2 (if allowed) or outright sale.

Hope that helps!

Good Luck,

Jim