No Cash Flow on Rental in San Antonio

[Cynthia Johnson]

Hello Everyone,

I am a newbie real estate gal in San Antonio, Texas, and it’s taken me some time to feel educated enough to even ask pertinent questions, but things are starting to gel after a year of reading and listening, and I finally have a situation I would really like some advice on:

I have a property I’ve been renting out for two years with a local property management company. The house is 10 years old, and between several AC repairs and multiple plastic PEX plumbing leaks, I’ve officially taken a loss of about $2K for 2018. I’ve run some comps on it, and it would go on the market for about $196K which means I have about $67K in equity.

What would you do with this property? Sell outright? Offer a lease option to tenant? Or, just hold on; maybe it will cash flow next year?

Thank you in advance for taking the time to offer your opinion.

[Brad Larsen]

Awful advice on home warranties.  Never heard of worse advice to provide a good service and keep good tenants.  "Here - YOU fix it!"  Recommend never touching a home warranty for a rental property.  

Self management is a viable option as long as your brokerage allows it for your personal homes.  Some realize that there is a minefield in property management between fair housing, repairs, security deposits, insurance, etc....  Brokers may not allow you to manage.  Assuming you have gone through that permission seeking, you could do this.

My next point would be - WHY WOULD YOU SELF MANAGE? 

If you are wanting to invest and buy / hold more - go find those deals.  Pay someone $20 / hour so you can go make $2,000 / hour with the next deal.  

Also, recommend never selling.  Have you looked at the magical DEPRECIATION numbers yet on your tax return?  That may change your mind as new investors never realize the true value of that.  Make sure you are accounting for it with your tax returns.  Your break even is a good thing.  Depreciation and appreciation make the investment strong.   

Hope this helps!