Sell at a loss or rent at a loss
At the end of 2023 I purchased an old 4plex out of state (MD) for $180k (it appraised for this amount), 20% down with 7.99% rate, mortgage is $1364 with piti. Its in a lower-income area where the current rents are $400, $650, and $800 (vacant could rent for $600). On paper it made sense, but in reality its been a nightmare. I have cash flowed negative almost every month. The inspection report did not mention many of the expensive repairs I'm facing.
For one, one of the units cannot even be rented until I spend at least $10k getting the electric up to code, among other repairs, so its been sitting vacant. I have a property manager, but my checks are only a few hundred a month if I'm lucky after all the fees and expenses. I have shopped around for a different PM but there are almost no other options in the area. It seems like there's an issue at least once a month that I must pay for, on top of trying to budget to fix several leaks (roof included), radiator not working, no shower in one unit, etc. I highly doubt this house will sell for the $180k I paid, let alone more than that.
Comps in the area go for $60k-$160k at most now, and they all sit on the market for 180+ days. If I'm even able to find a buyer, I will more than likely lose every penny I put into it and probably have to pay. If I decide to do the repairs and continue renting it, I will cash flow positive a bit, but to get to that point I would have to spend thousands (replace entire electric system, roof replacement, etc). I have two local rentals that cash flow nicely, but all that profit is thrown towards this house so I'm completely negative.
This was my first property that I purchased solely as an investment, and I'm realizing I did not do my due diligence. I hate the idea of losing over $60k (took HELOC from my paid-off primary) in which I'm paying for each month, but I'm terrified of all these expenses completely draining me. I thought about doing a 1031 for something local but I wouldn't make enough for the 20% down payment. Any advice would be appreciated.
