Bought first property, but not sure if i should keep it

[Eric Levy]

Hey BP!

Little backstory: I'm from CA and bought my first property in OKC. I was indecisive about where to start, but I found a pm and realtor that I liked there and also researched that the area was growing, so I went with it. Bought a MF property very close to OKC University for 96k, and put about 10k into it. I just wanted to buy a property to get the experience, so I didn't search for the best deal or anything, but I figured this was a decent deal. After owning it for a few months, I'm starting to think otherwise. The property consists of a 2/1 and a 1/1. The 1/1 needs a lot of work still, but has a long-term tenant who seems comfortable and signed a year lease for $550. I've tried to rent the 2/1 for three months, and have been dropping the rent by $25 every few weeks. Started at $825, and it's now at $700. It's now low compared to market rent in the area for the size, and it's right near OKC so I really am not sure why it hasn't rented. I guess the surrounding houses around it aren't great, but the neighborhood isn't bad either. It's NW OKC, so in general it's not a bad area. PM and Realtor seem confused on the vacancy as well.

Since both the 2/1 and 1/1 share a meter, I pay for water, trash and gas. This is already $140 without the upstairs rented, and will probably be more like $220 or so when fully rented (fixed base fees consist of a large portion of it). Somehow with all these utilities paid, I'm still having trouble renting. Here are what the estimated numbers look like if both units are rented.

Rent: Hopefully $1250

Mortgage: $587

Utilities: $220 

PM: $103.75

Cash flow is $340, before accounting for any other expenses such as capital expenditure and vacancy. So right now I'm obviously losing money, but after this rents I should be cash flow positive. But I put $42k into this (including repairs), so my c-o-c at full occupancy will be 9.7% before additional expenses, which doesn't seem very good for an area with low appreciation. Also, if the downstairs tenant ever moves out, that space will need an additional $15k-ish. He's been there for 10 years, so hopefully that doesn't happen soon.

When I bought the property, I stupidly didn't check to see if the units were separately metered. I also did not plan on this amount of vacancy. I'm wondering if i should just rent out the upstairs unit and then try to sell the property and look for a better one, or keep the low c-o-c.

What do you guys recommend? Debating on looking at other states as well aside from OKC. 

Thanks!!

[Dennis M.]

@Eric Levy

You need to understand a few things that aren’t often talked about on here . First off you can’t expect to get a grand slam home run on your first deal because your so new it’s difficult to have the insight a seasoned investor has and ability to see numbers . Secondly you need to realize this is very common to not make any profit at all the first 6-12 months when you get into a multi especially one that’s distressed that has deferred maintenance issues. There is a stabilization period ! Now to the reason your not getting renters . It’s bone chilling cold almost no one moves this time of year . This is a time that you don’t want to have a vacancy because they are difficult to fill without scrapping the bottom of the barrel for the tenant pool . Chill hang in there and keep plugging away . Your three feet from gold bro