Sell or continue renting SFH in St Louis area

Lesley M. · 2024-09-13T11:09:41-07:00

Hi there, I purchased a SFH in Dec 2021 for $99k. I spent about $12k in repairs and upgrades to make it rentable. I rented it for 1 year with minimal issues. In 2023, tenants moved out and I put in $5k in turnover costs. Then it didn’t pass the city inspection because of landscaping debris and tree branches that fell in my yard, so I put in $5k more. After 6 months of vacancy, a new tenant moved in and immediately began complaining about everything. I had to replace the fridge, HVAC, and various other repairs that were another $8k or so. She’s been paying rent but we are not renewing with her. She’ll be out by Dec 1. Given that I’ve been paying about $15k on this property every year, it’s been a money pit. I’m trying to decide if I should keep going, or take this as a learning experience and sell it. I have a realtor looking at comps to get a sale value. Back of the napkin, I think $130k would be break even. Redfin says its value could be 150-160k, but I doubt that’s accurate, unless the market heats up with lower interest rates. What factors should I consider? How can I tell if my experience with repairs and tenants was bad luck? Or if it will continue?

Dustin TuckerPro Member

Lender · Savoy, TX · Member since 2020 · 187 posts · 78 votes

2y

Hello Lesley, Have you thought about using a DSCR loan to do a cash out or rate and term refinance to recoup the out of pocket money you have spent on the property. If I were you and could do a refinance and get all or most of my investment out of the property, I would hold on and wait for the market to come back next year.

You can get up to 80% LTV on a DSCR Refinance.

I assume you are using a Property Manager, I would take a little more control of my future tenants and call their previous landlord to see if they made any repairs to the property while they were there, how many time they were late on their rent, etc.

[email protected]903-647-6036

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Adam BartomeoBusiness Member

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

2y

You will have to understand if you are finished with the heavy lifting on the maintenance. Also, why would it ever take 6 months to fill a unit? 2 months is a long time. You need to cut down that time by lowering the price or improving the property.

[email protected]239-339-3969

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Benjamin AakerPro Member

Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes

2y

Looks like you are investing out of state? Tough to do when starting out. If you don't have a property manager, get one. If you do, then get a new one.

These things happen from time to time, but you hopefully won't have those big continued repair expenses. Hopefully you also are paying down a mortgage; if so, the total investment might still be a success.

If none of these work for you, get it sold. Take a loss if you must. Invest in something closer to home.

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

@Lesley M. suggest getting the best home inspection you can!

Also, put any repairs pointed out by the inspector into the following categories (by priority)

1) Health & Safety - to avoid tenant injury and potential lawsuits
2) Property Preservation - to stop further costlier damages
3) Government Required - city inspection repairs & S8
4) Marketing Negative Impact - who'll rent a house with purple bedrooms?
5) Miscellaneous - anything that doesn't fit in above

Also, keep in mind:

1) Tenants all seem to want a brand-new home - and then want it for "free". So, don't overreact to their maintenance requests.
2) A landlord should eke out every bit of life from a roof, HWH, etc. and put band-aides on it until it makes economic sense to replace it.
3) Maintain to the Neighborhood! Too many landlords want to keep their properties up like they will live in them.

You'll never make money if you don't follow these principles.

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Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

2y

Hey Lesley, I've seen/heard this story many times. About half the time the investors bought something really crappy in a bad area and the experience you describe will be repeated over and over.

The other half of the time this is just bad luck and things turn around because the property is in a decent area.

It's really hard for anyone to know which situation you fall in because we don't know where the property is located (precisely), what exactly you've been doing in terms of repairs and maintenance, who's managing this property, etc.

For example, $5k in turnover costs seems very high to me. I'm usually doing less than half of that. In fact, I had to evict a 5-year tenant recently and the total turnover only cost me $2,000.

But you say you put ANOTHER $5k into it after city inspection didn't pass. Why wasn't it city certified to being with seeing as you'd only owned it for a year or so?

I also don't see how you're replacing HVAC after you just passed inspection. Is that specifically a central air unit or did the furnace crap out? If it's central air, I'm surprised the market at this price point is demanding those kinds of amenities. I'd say the same about appliances.

In most C-Class areas in Detroit, for example, tenants are bringing their own appliances.

Long story short, it's hard to give advice here without much more detail.

We also don't know your goals. Are you planning to scale and buy more in St Louis? If so, it might make sense to work through this one and hold on. If not, does it make sense holding just one property in St Louis even if you decide you can work through these current hiccups and hold?

Only you can answer that.

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Sell or continue renting SFH in St Louis area

Sell or continue renting SFH in St Louis area

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