My rental property, how is it?

Question

First post, just wanted to see what yall's thoughts were on this property. I'm the fell into landlord position guy. It was my residence, purchased in 2010 for $123k. I refinanced in 2017 to a 15yr mortgage, total mortgage payment is $900 month. Moved out in 2018 and have been renting it since then. Was renting at $1200 until this year, bumped it up to $1300. It's military area so new tenants every 9-12 months usually. I've had pretty good tenants and been using the cash flow to put back into the house and fix minor issues, so that when it's ready to sell I won't have anything to do to it. It's currently paying off $500 a month toward the principle. Doesn't have much maintenance costs, all utilities paid by tenants. Sometimes I want to sell it to not have to have any major issues (none yet), sometimes I think I should keep it forever. Current mortgage balance is $80K, should be paid off in about 11 years. I'm just a cop so I don't have a huge salary or anything and don't have the desire to buy several properties.

Any thoughts or opinions?

Thanks,

Bill

Any thoughts or opinions?

Thanks,

Bill

Joshua McMillion · Answer

Account Closed

I'm curious why your tenant moves out every 9 to 12 months if it's in a military town. Most tours for Soldiers are at least two years unless you are going to a professional school for promotion.

The investment sounds solid. I am a buy and hold guy who would tell you to use that cashflow to scale up, but you need to determine your goals. What are your goals? Why are you investing in RE: Passive income or something else?

Sincerely,

Josh

Account Closed · Answer

Got into the rental because the woman I was dating at the time was a Property Manager, so she knew all the rules/laws/paperwork. I had just done some recent repairs, fixed up the house and hvac etc, prior to moving, so everything was in good shape. Figured I could rent it, each year was about $5k getting paid off principle and I'd get my money back. We're no longer together and I lost my confidence in landlording alone.

The tenants moved from either getting out of military, or moving to a location on the other side of the bridge (bad traffic), one base on this side one base on the other. I'm more worried about having to deal with bad tenants than just an expense for a repair. I've had good luck screening and having good tenants though.

But my current house, mortgage is $1100 and I could probably rent it for 1600, so I'm also thinking about that if I were to move again, rent both properties. Life just keeps changing.

Brittany Olofsson · Answer

Yes I agree with the other responders. I would hold on to it. If it's paying for itself and you seem to be smart with saving the money towards major repairs, eventually this could be a retirement payoff for you in the end, or 11 years down the line, sell to pay for kids college/ wedding, etc.

James Leigh · Answer

@Bill Ward Hi Bill, if you’re just looking for personal opinions mine would be not to sale. You seem to be able to manage it well from what I’m reading and you’re cash flow positive. Unless the reason for selling would be to put the funds towards another property (whether a rental property or primary residence) or need, then I personally wouldn’t sell. I would just continue to let someone else add to my net worth monthly by paying down the mortgage. From the post, seems like you’re a little worried about a big ticket repair popping up. Which is always a risk.

But, every person is different. More things come into play than whether the numbers work or not. If you are someone who just doesn’t like being a landlord and having to manage tenants. Or have other underlying reasons for perhaps wanting to sell. In the end, you know you’re reasoning and whatever decision you make will be the right one, because that’s what you wanted to do.

Best of luck!

My rental property, how is it?

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