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Updated over 6 years ago,
Creative ideas to minimize loss?
Hi all,
I currently own two rental properties and have owned a few additional about a decade ago when I lived in another state.
I'm currently in the process of starting to build my portfolio again, almost through a BRRRR on another right now with hopes to get into yet another within 6 months max.
My question:
One of my rentals was purchased by me as a primary residence when I was 28 yrs old or so. Its a Condo, and I bought it at the absolute PEAK of the market in 2005-2006 and lived there for 10 years. Terrible purchase.
I have since moved out of there. It was not purchased as a rental at the time, but due to the crashing market, it was/is underwater and I had to convert it to a rental because I couldn't sell it.
I have a great tenant in there (going on 3 years with slight rental increases every year). He takes great care of the space, does minor maintenance himself, and I get the rent usually EARLY by a day or two. Rent is currently at market rate or maybe $25 below, can't really raise it much anymore right now at all.
However, since it was not purchased as a rental in 2005, it doesn't make monetary investment sense. It still loses money each month, to the tune of about $150/mo. On top of that, the condo association (very small, 6 units only) is a disaster and is nearly bankrupt, the shared space (i.e. yard, parking lot) are in terrible shape, and the current association officers won't take steps to collect against past due association fee owners. I ran the association in 2009-2012 or so, and I filed court papers and garnished wages against deadbeat owners. Unfortunately, they quit their jobs and escaped the garnishment, and the local sheriff is not helpful when it comes to chasing these types of things as its considered "small potatoes". Getting the money due to the association from the deadbeat owners is basically impossible.
I can't refinance because the crash of the market versus the amortization of my mortgage on the space means that the balance due (principal) is basically equivalent to the appraised value of the property. The mortgage companies won't touch a ReFi because they'll only refi at 80% of appraised value. I can't sell it because when I factor in closing costs, commissions, etc I'll have to bring at least 10K to the table.
Any creative ideas to minimize this loss now? It doesn't seem like a ton of money, but owning this one is definitely slowing my progress toward picking up actual money-making investment properties. Its eating into my other rental income profits and slowing my ability to have cash available for purchases when a hot deal crosses my path.
Thanks for any ideas you can throw at me!
Brian