Accidental landlord not cash flowing

2 Replies

Hello I am an accidental landlord need advice on how to proceed. I bought a house as a primary residence and rented a room to a friend. Ended up moving into my girlfriend's place and had a friend of the previous friend also move in. I am collecting 900 dollars a month which I originally thought was great. They are paying the majority of my mortgage/tax/insurance (1,056 a month). Now after finding BP I realize I am negative cash flowing. Market research has shown I could possibly rent for about 1400-1500 a month, I bought the property for 111,000 now worth conservative 140,000. My question is now should I sell the property and try to find a property closer to the 2% rule, or find tenants that could afford the average market rate? Thanks, Derek.

@Derek Markowicz

Remember the 2% rule is only a guide and does not work in all markets.  You should look at the numbers based on the 50% rule/guide and 1% is more typical.  This is a numbers game based on comps.   There are advantages to selling if you still meet the criteria of living in the house with x's number of years in the past 5 years.  I would look at raising the rent, if that makes your numbers work.   Run the numbers as if you were to sell the house as well.   The spring time is a better time to find new tenants than winter.

Outside of rough neighborhood you probably aren't finding something that meets the 2% rule.

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