Mistakes made... Looking for advice

[Sean Taylor]

As the title suggests, I can already admit to mistakes for this deal. What I need help with is how to pivot. In March 2022 we bought a 4bd home in Montgomery TX (about 45 min north of Houston). My wife wanted an STR and we were excited about the area. Lake Conroe with yacht club amenities. We did a cash out refi and borrowed $345,000 @ 3.5% to use to buy a house. We have a property manager and the property has generated $24k in rental income for 2023 as of the date of this post. By the time you add our true expenses, like the cash out refi ($1500), landscapers, wifi, utilities, property taxes and insurance we are spending $40k leaving us negative $16k/ yr at this point. We have twice the number of guests YOY so we don't know if we should just stay the course or cut bait and invest elsewhere. Property values have come down about 10% which means by the time we pay commissions to realtors we will likely lose between 50k-70k on this property. Solutions we have considered are changing to LTR, selling and investing elsewhere, continue to STR and market the property more. What would you do?