Got my first rent check..... Now what?!!

[Tina Acevedo]

Bought my condo 2.5 years ago on east side of Oahu. Original loan amount $379000 Interest rate 3.75% no money down or PMI 5/5 arm Current balance is $360000 roughly My tenant currently pays $1900 a month which covers my mortgage payment and escrow account. Does not cover any HOA fees HOA fees $356 a month I currently gross $5800 a month from my two jobs only. Not including the rental income. Condo value has gone up in 2.5 years Current country assessed value is $397000 I do not know what to do at this point with my money. I'd like to set up the condo on a better mortgage that would also allow me to make positive cash flow of $100 or more. I'd also like to keep moving forward towards buying my second rental property. I currently live for free with family so I'm not worried about finding my own personal dwelling yet. What would you seasoned investors advise me to do in my current situation? I have no reserves for my condo. I have no significant debt and I have a good credit score. Should I save? Should I go for a HELOC? Refinance? Aloha.

[Michael Minor]

My personal opinion is that you sell the condo. You are losing money on rent and there is equity sitting in the property now. If you sell the condo you can use the cash made on the sale to invest into a cash flowing property. Even if you refi into a more favorable loan you probably won’t be able to reduce the mortgage enough to cover all the expenses and make money on the rental. Even if they are paying all of the utilities there are still repairs to be made and some cap ex (I know in a condo these will be less but you still have some). The other thing is property management fees. Some people will say that you can self manage and save money to make it work. My question to you is, why would you do for free what someone else would get paid for doing? This means that even if you’re self managing you should be paying yourself the same as you would a property manager for managing for you. All these expenses are surely not being accounted for currently and I do not think a refi will free up enough to cover them all. Again my opinion is to sell and invest in another property.