Quote from @Bill B.:
Your property taxes are increasing $1800? (From negative $150 to negative $300/mo). That’s not good. A bad year for me is a couple hundred more.
What I meant but the “if $151/mo would make all the difference” comment is if you had it, you couldn’t count on it. A fridge, a furnace, an ac unit could go bad and it would all be gone. So if you NEED that $151, this isn’t the property for you, you can’t afford it.
One of my best investments was negative $800/mo cashflow. But I was paying off $1,500/mo in principle with a low interest 15 year mortgage. I was making $8k while showing a taxable loss of $12k (providing an additional $3k) while it appreciated about 5%/yr (generating another $30k/yr). So I was feeding the property $10k/yr to make $40k in year 1, the worst year. Now it generates $30k in Cashflow but it’s almost all taxable. But I was ready for that investment because I was about making money, not cashflow.
Your numbers don’t sound so promising. The tax is a killer. Would you make a profit if you sold? How much would you have left after taxes? Is there anything better to buy? You know this deal, paying $20-30k to buy something else has to be for a known better deal. Are you using a PM? Are you sure you’re getting market rents? (If you’re not using a PM contact a couple, give them the address and so them how much they would charge, how long it would take to fill, and what they charge you. You might find your net is higher than doing it yourself.) try to find a local expert. Good luck.
Again, good perspective, so thanks for educating me on how to look at this situation.
I retired early last year at 57, but want cash flow to cover my living expenses so I can let my 401k/retirement nest-egg ride until I'm 65 or whenever I want to tap into it. So cash flow is more important to me than increasing my net worth. However, I'm not saying that perspective is the right one. I'm open to thinking differently if I should be.
Taxes are going up from 5122 to 8634 this year, an increase of nearly 69%! I'm fighting the increase, of course, but that likely means it only comes down a smidge from 8634. The monthly increase is $293, and I'm already short on cash flow by $96/month, so I'll be short $389/mo unless I can increase rent.
At current rent of $1625/mo., my annual revenue on this property is $19,500.
Total expenses with the new tax increase per month is $2014 or $24,170.
A cashflow loss of $4,670 for 2023.
This leads me back to the question, do I take option 1, 2 or 3 or some other option/perspective I haven't considered? I do have another rental property that is doing well and can cover this gap. Maybe option #1 (subsidize it) is best and I need to turn my attention to finding better cash-flowing properties.
