Rental property question

Tucson, Arizona
General Real Estate Investing
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Rental property question

Account Closed
Member since 2026 · 3 posts · 0 votes

Hello everyone, 

I am pretty new to this rental property business. I'm currently serving active duty military. I had bought a home in Tucson, lived in it for a year and is now being rented out while I live on base. I think I had made a few mistakes with buying this home... It is a 2 bed 1 bath townhome. I used the VA loan to buy it. It was a turnkey property. Only thing I added was I leased solar panels on it. My mortgage is $1,481 and it's being rented out for $1,525. No not much room for any potential expenses. I had already refinanced using the VA IRRRL. Now looking at the pay-off on the home and what it's worth, I'm underwater 20k. I'm not sure what to do. I would assume I just try to keep it rented out for a few years then try to get out of it.

What do you guys think I should do? Tips or suggestions?

Also I have been reading books and watching videos, I see everything about all this different types of loans you should use for low down payment etc. I don't seee anything about the VA loan. (I know that audience is very limited).

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  • Aditya Kumar
    Accountant · Kolkata West Bengal, India · Member since 2026 · 10 posts · 2 votes
    2mo

    You need three things to go in your favor for this property to work out:

    1. Higher rental yield — not something we can control.
    2. Lower interest rate via VA IRRRL, to bring down your PITI — Fannie Mae estimates VA rates could hit 5.7% by mid-2027. Check your current note rate: if 5.7% is at least 0.5% lower, you might qualify for another IRRRL soon.
    3. A reserve for capex/unforeseen expenses — a cash-out can build a reserve but that generally pushes your rate (and payment) up, erasing the operating margin.

    You need at least two of these three to happen at the same time to make this property viable to hold.

    Given that, my suggestion: take your time and scout another property in a market you know well. No rush. Once you're close to a decision on the new property, sell this one and cut your losses. Better to book the loss now than let it grow for later.

    You need three things to go in favor for this property to work out:
    1. Higher rental yield (Not something we can control)
    2. Lower interest rate on the VA refi so we have a lower PITI. (FNMA estimates VA rates at 5.7% by mid 2027, not sure if that is 0.5% lower than your current rate)
    3. A reserve for substantial capex or unforeseen capex (Cannot do a cash out refi as that generally takes the rates up and increases the mortgage payments) 
    You need any of the two items above to happen simultaneously to make this property viable to hold.
    Having said that, my suggestion is to take your time and scout another property, in a market you know well. Really, take your time. Once you are close to a decision, sell this property, and cut your losses.

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  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    2mo
    What is your longterm investing plan? It's hard to manage remotely and harder if your heart isn't in it. If you don't plan on continuing REI, then sell and take the loss. It'll save you money in the long run. If you plan to continue investing then you should consider keeping it. Remember that you are building equity in the house even if your income isn't great.
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    • Account Closed
      OP
      Member since 2026 · 3 posts · 0 votes
      2mo

      @Benjamin Aaker I want to keep investing long term, I currently live in Tucson and so I don't have a property manager. I'm considering keeping it for many years and just hold onto it.

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    • Noah CorwickPro Member
      Realtor · Phoenix, AZ · Member since 2021 · 271 posts · 115 votes
      2mo
      Quote from @Benjamin Aaker:
      What is your longterm investing plan? It's hard to manage remotely and harder if your heart isn't in it. If you don't plan on continuing REI, then sell and take the loss. It'll save you money in the long run. If you plan to continue investing then you should consider keeping it. Remember that you are building equity in the house even if your income isn't great.

      I agree with Benjamin. 

      If you are in it for the long haul, I don't see why you should sell.

      Tucson continues to grow and depending on your specific area, appreciation should be on your side.

      Even though it doesn't cashflow much, don't lose site that you have someone paying for your asset which is a win in itself. 

      Overall I recommend really honing in on if you're more concentrated on cash flow or appreciation. 

      Hope this helps! 

      [email protected]602-834-4617
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  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 904 votes
    2mo
    Quote from @Account Closed:

    Hello everyone, 

    I am pretty new to this rental property business. I'm currently serving active duty military. I had bought a home in Tucson, lived in it for a year and is now being rented out while I live on base. I think I had made a few mistakes with buying this home... It is a 2 bed 1 bath townhome. I used the VA loan to buy it. It was a turnkey property. Only thing I added was I leased solar panels on it. My mortgage is $1,481 and it's being rented out for $1,525. No not much room for any potential expenses. I had already refinanced using the VA IRRRL. Now looking at the pay-off on the home and what it's worth, I'm underwater 20k. I'm not sure what to do. I would assume I just try to keep it rented out for a few years then try to get out of it.

    What do you guys think I should do? Tips or suggestions?

    Also I have been reading books and watching videos, I see everything about all this different types of loans you should use for low down payment etc. I don't seee anything about the VA loan. (I know that audience is very limited).


    I wouldn’t rush to sell this one just because the numbers are tight today. You already have an asset, a tenant, and valuable experience as a landlord, which is a big first step. I’d focus on improving the cash flow over time by reviewing expenses, increasing rent when the market supports it, and building your next purchase separately. Also, don’t overlook the VA loan as a tool; many military investors use it successfully by house hacking and repeating the process. The biggest thing now is learning from this deal and making the next one stronger.
    [email protected]614-418-6081
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    • Account Closed
      OP
      Member since 2026 · 3 posts · 0 votes
      2mo

      @Arman Ahmed thank you, this is definitely a learning experience/opportunity! I plan to build my portfolio and continue to grow and learn how to analyze properties! 

      0Reply
  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    2mo

    The good news is it looks like you're in a decent market with long term population growth trends. I'm basing this on a quick look at demographic trends, which is always where I start with evaluating a market I'm not familiar with. If you were somewhere different, my thoughts would probably change. 

    I'm in "Military City USA", which is more widely known as San Antonio, TX, so I work with a ton of clients who are in a similar situation to you. They used a VA loan, bought with an agent who had no clue about investing, and plan to keep the property as a rental when they move to their next duty station. The good news in that time heals almost all wounds when it comes to real estate investing. Even if you're not cash flowing now, inflation is on your side, and if you're able to afford to hold the property long term, you'll probably be glad that you did.

    One mental trick that I've found helps investors in your shoes is looking at any months with negative cash flows as making your down payment over time. If you bought with 100% VA loan, you never actually made an investment, as far as dollars are concerned. It stands to reason that at some point you'll have to put some money into the deal. I've bought a few properties with my VA loan over the years, and in the early years had pretty lean cash flow. A couple of those deals ended up amazing after only 4-5 years. HODL

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
    WebsiteView Page
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  • Christian Rodriguez
    Rental Property Investor · Tucson, AZ · Member since 2024 · 24 posts · 10 votes
    2mo

    Well wat you do with it depends on what you want to accomplish financially and what are your long term goals. Yes a couple mistakes but nothing that time can fix. There are many levers that makes a good  deal on real estate investing... not everything in RE is cash flow, but I guess that's the first we get educated on our investing journey. On loans, brief downpayment %:

    FHA 3%

    Conventional 5%

    VA 0%

    Investment loans 20-25%

    Hard money : this is an entire different world. not that complicated thought.

    what a property is worth is only important if you are on the selling  phase.

    PD:  stock goes down, you may feel bad, but an experienced investor will see a sale at a discount and will buy more.

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  • Adam Michael Andrews
    Investor · Austin, TX · Member since 2017 · 107 posts · 89 votes
    2mo

    Two schools of thought: you can cut losses or delever the property (pay down debt) until you have enough cashflow to cover expenses. As it is, you’re setting up to get squeezed if the market takes a turn for the worse.

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

    It sounds like your only option is to sell and owe money or have negative cash flow until the value appreciates high enough for you to sell it. If it were a 3/2/2 house I would tell you to wait it out but a 2/1 town house will take a lot longer to bounce back and may never bounce back. I would highly recommend weighing all of your options carefully.

    [email protected]239-339-3969
    Bartomeo Property Management4.7150 Reviews
    WebsiteView Page
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