I am new on Real Estate Invenstmet

4 Replies

Hi BP, I just rented my property and I'm not getting a lot of return back because I pay $ 911 for the mortgage and I have the property rented for $ 1100. I also pay a property manager %10 of the rent. Is it better for my situation to refinance the property to have more cash flow or do I keep it as I am doing now? I new on all this of investment in REI.

@Jason Hernandez welcome to the BiggerPockets community!

You're running into a problem many first time landlords face. That is, not fully factoring all expenses.

Here is a good article on the subject: https://www.biggerpockets.com/renewsblog/2014/12/02/rental-property-expenses/

I'm not sure of all the variables, but without drastically increasing your rent and/or lowering your payments, it doesn't look like this property is going to be a great asset for you. Unless you think the property is in a good potential growth area, I would probably consider leveraging into a property that produces a higher ROI.



I agree with @Andrew Fredrickson

You can also think about the property in terms of the 4 streams of income/wealth creation from real estate: 

1. Cashflow
2. Tax Benifets
3. Appreciation
4. Debt paydown/Equity growth.

Perhaps your property represents a big winner in one of these areas?  Doesn't seem like a cashflow champ, and if you refi the property then your mortgage will probably be going up - but you'll have the cash to play with.  

I was in a similar situation with my first rental.  The bank let me use equity from that unit to buy more - so it was worth it to keep it.  Plus, even though the cashflow is not great it has appreciated nicely.

One other thought: Would managing the unit yourself for the time-being be an option?  I am by no means a great property manager (i'm too nice!) but I have done an OK job over the years and saved a bunch of coin!

Good luck!