SFH Rental Strategies or Exit Strategies

[Anthony Hidalgo]

Hello, BP family! We have run into a dilemma. Our tenant is breaking the lease early. We are in the 80925 area code of Colorado Springs close to Peterson SFB, Shriever SFB, and Fort Carson. Home is a 3700SF 5/3 Ranch with basement. Current remaining mortgage is 528k @4.375 VA.

Some of the options include:

Re-rent at a $600+ negative cash flow.  

Rent by room with all utilities included for $700-900 per room and $1000-1200 for the primary. ($3800-4800)

Fully furnished rental.  I'm new to this concept, but I've heard insurances will pay recently for displaced families.  

Traditional Sale in line with market.  We're waiting on an appraisal since there are no true comps in the area that have sold recently. 

Creative finance sale.  Still working on terms and waiting on appraisal.

Any information is welcome and greatly appreciated!

[Brian Bohrer]

Hello @Anthony Hidalgo,

I will say that you are definitely not alone in your situation. There are many buyers out there who purchased in 2020 to mid-2022 and are in the same boat! Either their home may not be worth as much as they expected when sold or insurance and taxes have increased to the point that the rent no longer covers the PITI. I run a property management business here in Colorado Springs and have seen this situation many times over.

If your goal is to build wealth, then I would not suggest selling the home.  As Greg mentioned above, the appreciation and principal paydown is most likely more than the "loss" of $600 per month that you are paying in.  As long as you can afford to cover this difference, then you are still in a good position to build wealth in the future once rents catch-up.  

If you are interested in hearing about how I can help you lose less per month on your rental property, I would love to chat!  I specialize in finding creative ways to make the rental work for you now while we wait for the home to build equity over the next 2-5 years so it can be sold for a profit in the future, or at least until rents improve enough to cover the mortgage.  I wish you the best in your adventure, just don't sell!!

Brian Bohrer - GRRS Inc