I’m in desperate need of experienced investor advice!

Norfolk, Virginia
General Landlording & Rental Properties
2yFollow

I’m in desperate need of experienced investor advice!

Kyle Johnson
Rental Property Investor · Fredericksburg VA · Member since 2021 · 8 posts · 11 votes

I bought a home in Norfolk VA in September 2021. I lived there for 3 weeks and then had to move back to Fredericksburg VA for a multitude of family issues. Since December of 2021, it's been rented out consistently. The home was bought from a flipper who did a horrible job. He essentially put lipstick on a pig. I've already put a few thousand into repairs and today I got an email from my PM with a quote of 16k because the entire roof needs repaired. If I sell the house. I don't have the money to fix the roof. I'm looking at selling the house and using the proceeds to fix the roof. I'll pretty much break even at that point. My investing goals are to have a nest egg for retirement. I'm 25 currently and I'm in serious need of expert advice. Thank you.

Kyle Johnson 

4Reply
50 views

Most Popular Reply

Jon K.
Rental Property Investor · Perry Hall, MD · Member since 2016 · 591 posts · 606 votes
2y

Regardless of how good of a job the flipper may have done, periodic repairs and capital expenses like a new roof every X years are part of owning a rental.

Whether or not this property is a "good" rental is subjective and is based on your own criteria. What I would encourage you to do is to compare how much cash you currently have invested out of pocket in the deal and also calculate what the cash flow is for that property.

Cash flow is the income (rent) minus all expenses: mortgage payment (including principal, interest, taxes and insurance), average maintenance costs, capital expenses (new roof, hvac, water heater. Average this out to the best of your ability to a monthly amount), vacancies (you don't collect rent when the unit is empty, and also there's a cost to prepare the property for the next tenant), and property management.

Then, calculate your cash on cash return. That is, how much cash flow are you receiving per year, divided by how much cash you have in the deal. That number will give you something to compare to other investment vehicles that will tell you if this capital is better put somewhere else (if there is actually capital to deploy after a sale). You also have to take into account things like depreciation which will offset some of your gains come tax time, appreciation (the natural appreciation of real estate tends to track inflation), and debt paydown (over time your tenants will buy this property for you because part of their rent pays your mortgage).

Rental properties CAN be an excellent vehicle to build long term wealth. If you're 25 and have a 30 year mortgage and the cash flow is acceptable to you, just remember that you'll own this property free and clear by age 55 unless you pull equity out or refinance the loan.

If you sell the property now but don't have the money to fix the roof you could either sell it "as is", or give the buyer a concession off the price to replace the roof. If you choose to go this route, talk to an agent and they will be able to better advise you as to what to do.

7Reply
See this reply in the discussion

25 Replies

Jump to latestLatest
  • Jon K.
    Rental Property Investor · Perry Hall, MD · Member since 2016 · 591 posts · 606 votes
    2y

    Regardless of how good of a job the flipper may have done, periodic repairs and capital expenses like a new roof every X years are part of owning a rental.

    Whether or not this property is a "good" rental is subjective and is based on your own criteria. What I would encourage you to do is to compare how much cash you currently have invested out of pocket in the deal and also calculate what the cash flow is for that property.

    Cash flow is the income (rent) minus all expenses: mortgage payment (including principal, interest, taxes and insurance), average maintenance costs, capital expenses (new roof, hvac, water heater. Average this out to the best of your ability to a monthly amount), vacancies (you don't collect rent when the unit is empty, and also there's a cost to prepare the property for the next tenant), and property management.

    Then, calculate your cash on cash return. That is, how much cash flow are you receiving per year, divided by how much cash you have in the deal. That number will give you something to compare to other investment vehicles that will tell you if this capital is better put somewhere else (if there is actually capital to deploy after a sale). You also have to take into account things like depreciation which will offset some of your gains come tax time, appreciation (the natural appreciation of real estate tends to track inflation), and debt paydown (over time your tenants will buy this property for you because part of their rent pays your mortgage).

    Rental properties CAN be an excellent vehicle to build long term wealth. If you're 25 and have a 30 year mortgage and the cash flow is acceptable to you, just remember that you'll own this property free and clear by age 55 unless you pull equity out or refinance the loan.

    If you sell the property now but don't have the money to fix the roof you could either sell it "as is", or give the buyer a concession off the price to replace the roof. If you choose to go this route, talk to an agent and they will be able to better advise you as to what to do.

    7Reply
  • Quinton Thomas
    Member since 2023 · 32 posts · 16 votes
    2y

    Hey Kyle, sorry to hear the situation that you are in. Would agree with what Jon said. it's a part of real estate. eventually it would have to be redone some point in the future. If you do go with the selling route, I'd recommend going "sold as is" or build you asking taking in consideration of the repairs needed. 

    another option depending on financial situation consider financing the repairs? That's depending on the extra cash flow the home brings you and how much you have after all expenses on the personal side. I personally finance 95% of my renovations via credit, lines of credit, or loan's. which I pay them off quickly. 

    3Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Kyle Johnson did you get three bids?

    Did you see pics, preferably video, of the roof showing WHY it needs to be replaced NOW and can't be patched to last another 1-2 years?

    You can't trust the contractors as they want to get paid to replace vs repair it.

    May not be able to trust the PMC as they may be getting a cut or want the path of least resistance.

    It's less than a 3 hour drive, so pick a weekend day to go look at it yourself. If you are still unsure, take a good video and then post it here for feedback. 

    Logical Property Management4.9464 Reviews
    WebsiteView Page
    5Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Kyle Johnson

    Why would you fix it after you sell it? Sell it as is.

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    2y

    @Kyle Johnson To give you good and actionable advice more details will have to be revealed.

    @Jon K. pointed to some of the calculations you want to make to determine the current performance of the property.

    You should be proud to already be a property owner at your age.

    A rental property has a life of its own that last about as long as a human life. The hardest time is to raise it to a point where it can run on its own. You are still on these early stages but each time you decide I sell and start with something else, you have to go through these hardest early years again.

    I am mentoring early stage real estate investors and if you like to have a conversation about your situation and options and referrals that can help you, feel free to DM me.

    I suspect you have money you are not aware of and eligibilities you might not know about. Credit cards would probably be my last option.

    I like to suggest the inspection route.

    2Reply
  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    2y

    @Kyle Johnson, I suggest digging in a little with this roof issue.

    1. Who said the roof needs to be replaced and why? Most people believe when an older roof has an issue that its time for a replacement. Roofers will recommend it, but they of course want the work to replace it!

    You might expect a shingled roof to last ~25 years because the shingle might be rated/warrantied for that period of time, BUT if you monitor and do repairs as they come up it can very well last 30, 35, or even 40 years which to many people sounds crazy but since roofs are expensive those extra years are like gold!

    So, dig in and see if you can do a reasonable repair and get several more years out of that roof allowing you to save and budget for a replacement at a time of your choosing.

    2. It sounds like the PM got this quote for you. They may have used a preferred contractor of theirs and depending on your contract stand to collect a portion of the repair making the bill higher. Consider whether you need the PM to hire and manage this contractor. Unlike other repairs that might require someone on-site handling a roof really could be managed remotely by you.

    3. I also suggest getting a couple quotes yourself independently of the PM to see if the original quote is inline with what you should expect to pay.

    If its a shingled roof ask whether it can be a rollover roof (just adding a 2nd layer of shingles) to reduce the cost. Digging into the details allows you to make decisions and control your expenditures. A roofer will often just quote a tear-off roof because they want to bigger job to make more money. 

    3Reply
  • Kyle Johnson
    OP
    Rental Property Investor · Fredericksburg VA · Member since 2021 · 8 posts · 11 votes
    2y

    @Kevin Sobilo I appreciate the advice. I work as an inspector on bridges and roadways. I have some construction experience but not with residential homes. From the videos I saw, you can see rotted plywood with holes in it underneath the shingles. Every time it rains the ceiling leaks inside as well. I did get a reputable contractor in my area to ride down to Norfolk and give me quote. He should be doing that today or tomorrow. 

    1Reply
  • Kyle Johnson
    OP
    Rental Property Investor · Fredericksburg VA · Member since 2021 · 8 posts · 11 votes
    2y

    @Axel Meierhoefer 

    Thank you for the kind words of encouragement. You bring up a very good point that in selling and buying something different, I'll have to go through these headaches again with a new property. I'm into investing for the long run. I have a great job I love and other areas of income. I'm new to investing and other than this rental and my primary home, these are the only properties I own. I bought this rental with $0 down and a 2.6 rate with the VA Loan. I think I'll suffer through the headaches now and reap the benefits later on. I really do appreciate your advice and guidance.

    1Reply
  • David M.
    Member since 2022 · 71 posts · 69 votes
    2y
    A new roof is an opportunity to improve your property and protect your investment.  It's really not that much money and I think you should find a way to finance it, even if it's credit cards.  Yes, get a few quotes and yes, look at all possible financing options and their costs ( interest rate ).  Unless the building is in very poor condition, I think it's always a good idea to make capital improvements.  I've done it consistently and never felt like I had enough money. But I have alot of drive and tenacity, so I made it happen.  I've done roofs, heating systems, monitored fire alarm systems, unit remodels, etc.  I see it as investing in myself and increasing the value of my assets.
    1Reply
  • Jacob SloopBusiness Member
    Rental Property Investor · Virginia Beach, VA · Member since 2020 · 274 posts · 111 votes
    2y

    @Kyle Johnson

    I’m sending you a message , I’d be glad to help if I can, Im in the Norfolk Virginia Beach area.

    Selling should be the last option

    Like others have said , the PM companies could just be having a knee jerk reaction and telling you to replace a whole roof when you can repair it

    [email protected]757-235-0369
    Jacob Sloop537 Reviews
    WebsiteView Page
    0Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    2y

    @Kyle Johnson is there a potential insurance claim for the roof? What’s the reason that you need a new roof? And how old was the roof when you bought it? Just a couple of thoughts

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    2y

    @Kyle Johnson

    It sounds like you are getting ripped off.    I can't tell you how many companies will just quickly say "you need to replace it" vs. repair it, find a local GC, and ask for an opinion, I'm sure it can be repaired.    If it's a continual problem, then yes, replace it if it's had its lifespan, but it just sounds like you're getting the short end of the stick and the PM are using really expensive contractors at your expense.  

    Also, let me just say,  I feel your pain... everyone thinks rentals are easy, and passive, but the truth is--  they continually need things--$$$$$, and it's a list of ongoing expenses.  I will say, that the better you take care of it and proactively fix things to maintain it-- the easier it is.  

    1Reply
  • Buck P.
    Real Estate Investor · Fredericksburg, VA · Member since 2014 · 2 posts · 0 votes
    2y

    I'd get a couple of estimates on your own.  If it needs multiple repairs, often it is better just to replace the roof.  Did they give you a written estimate? or just a ballpark?  Anytime I get numbers that high I get hands-on.  

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    2y

    @Kyle Johnson,

    Check with your attorney and see if the seller may have misrepresented the property and its condition. You may be able to go after the seller and at least get a judgement, even if you never collect on it.

    Also, you should have had an inspection prior to closing. Verify that the inspector reported the roof issues and, if not, see if there are any remedies available to you.

    My $0.02 ...

    1Reply
  • Jay ThomasPro Member
    Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
    2y

    If sellin' and using the proceeds to cover the $16k repair bill sounds appealing, remember to factor in closing costs and fees. If the place has potential, fix the roof and hold onto it – you might earn back the repair money through higher rent or appreciation. Check with the bank about loans for fixer-uppers like yourself. Before you decide, get a few roof estimates. Don't settle for one – compare prices and make sure it's a fair deal.

    [email protected]832-889-5607
    1Reply
  • Alan F.
    Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
    2y
    Quote from @Kyle Johnson:

    I bought a home in Norfolk VA in September 2021. I lived there for 3 weeks and then had to move back to Fredericksburg VA for a multitude of family issues. Since December of 2021, it's been rented out consistently. The home was bought from a flipper who did a horrible job. He essentially put lipstick on a pig. I've already put a few thousand into repairs and today I got an email from my PM with a quote of 16k because the entire roof needs repaired. If I sell the house. I don't have the money to fix the roof. I'm looking at selling the house and using the proceeds to fix the roof. I'll pretty much break even at that point. My investing goals are to have a nest egg for retirement. I'm 25 currently and I'm in serious need of expert advice. Thank you.

    Kyle Johnson 


     From 2021 to now is 3 yrs, roofs dont go bad in 3 yrs. Someone dropped the ball. Roofs are very easy to inspect and monitor. PM's are not knowledgeable in construction, don't have a PM orchestrate any work. Contact at least 3 licensed roofing contractors and meet them on site. Manage this yourself. Here's a link to DPOR

    https://www.dpor.virginia.gov/Boards/Contractors

    Make sure the contractor pulls permits and provides warranty. Once the roof is done correctly you wont have to revisit this issue again. 

    1Reply
  • Kyle Johnson
    OP
    Rental Property Investor · Fredericksburg VA · Member since 2021 · 8 posts · 11 votes
    2y

    @Alan F.

    Thank you for taking the time to respond. I have a reputable roofer coming down to check it out. I appreciate your willingness to help. 

    1Reply
  • Hector Lugo
    Member since 2024 · 2 posts · 0 votes
    2y

    I would look at getting a loan and jump around an look for local roofing quotes preferably from people just starting out a roofing company or someone who does it as side jobs to bring the price down... or watch YouTube videos and attempt to do it on your own. for a fraction of the price. you can do it, I believe in you.

    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes
    2y

    @Kyle Johnson

    I would look into finding a way to replace that roof before you sell... perhaps fix other things while you are at it. 

    A conventional buyer will need an insurable roof on that house in order to buy it with a conventional loan. 

    [email protected]
    BookkeepingRE - Bookkeeping for Real Estate & Service-Based Businesses52 Reviews
    WebsiteView Page
    1Reply
  • Nadia DaggettBusiness Member
    Real Estate Broker · Tampa, FL · Member since 2019 · 105 posts · 64 votes
    2y

    @Kyle Johnson

    Just for an out of the box idea: To assist in funding your new roof: many solar companies offer financing that includes the cost of the roof along with solar installation. While the interest rate may be higher than a traditional Home Equity Line of Credit (HELOC), the potential benefits, such as a 30% tax rebate and 25% USDA grants, make it a compelling option. This not only helps with the upfront cost but also has the potential to lower your electric bill. Of course this is a suggestion from the sunshine state of Florida :)

    [email protected]813-527-1030
    2Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    2y

    Have you tried the insurance route? If no dice there, are you handy? I normally wouldn’t bring this up because most people aren’t very handy these days, but desperate times call for desperate measures, and being 25 you’re probably my nimble enough to work on a roof. I replaced plenty of roofs when I was in my 20’s and 30’s. It’s physically hard but not rocket science. Sounds like you’ll have to replace some rotten decking as well, so that will add to the difficulty. Perhaps hire a helper who has some roofing experience if you don’t have any, pull the permit as the home owner (possible most places, check with you AHJ and know that you obviously won’t have a warranty on the workmanship), rent/borrow a ladder/lift, dumpster, roofing gun, and get’er done. You could save yourself $10k easily. Just be safe. Talking to some solar companies isn’t a bad idea either. I used to work with some that would replace the roof before installing the panels as part of the deal, and they had good financing. Just avoid leasing the system if you can, go for a loan instead.  

    0Reply
  • Kristen HaynesBusiness Member
    Real Estate Broker · Greater Charlotte NC and Charleston, SC areas · Member since 2017 · 109 posts · 60 votes
    2y

    Kyle, you can get a new roof for your homeowner insurance deductible, if it's proven at some point to have had hail damage (which it probably does if it is in bad shape). Call a local roofer that has great reviews (check your local BBB or trusted Realtor in your area for recommendations)- call them and have them come out for a free roofing estimate. They will tell you if you need a new roof or just a 'tune up' and will give you a quote. then, if they tell you that you should 'qualify' for a new roof, call your homeowner's insurance company, get a claim adjuster out there, and they should approve a new roof with you just paying the deductible. There should be no waiting period. I'd love to help you with any questions that you have, even though I am not in "Fred-Neck", lol. 

    I'm pretty busy today from noon- on, but feel free tor each out to me tomorrow if you have any other questions. We all need to stick together to pull each other up! Best of luck, let me know how it goes! :) 

    New Home Buyers Brokers / Realty Pros58 Reviews
    WebsiteView Page
    1Reply
  • Sean HudginsPro Member
    Real Estate Agent · Chesapeake Va · Member since 2019 · 150 posts · 100 votes
    2y

    @Kyle Johnson I am really sorry to hear that you are going through this, I know what a head ache it can be and I have seen so many bad flips here in Hampton Roads. You mentioned that you have a 2.6% interest mortgage and I have to say that sounds like something worth trying to keep if possible. From what your explaining it does sound like the roof needs some major repairs especially if there is rotten roof decking, but that may not mean that the whole roof needs replaced and even if it does I think finding a way to finance that repair is a good idea, if the property has been steady and cashflows well already. What are your numbers on the property? How much equity do you have, what is the rent and expenses? With that info I could give you a better idea of what a good way forward might be. 

    As far as selling the property to get out from under the deal, if that were the direction you were to pursue, you need to take a close look at your closing costs and determine what the best way forward would be. Depending on where the house is in Norfolk makes a big difference as to who the potential buyers are going to be and what kind of condition they are likely going to accept for the house. I would suggest that sitting down with someone and discussing the fixes that need done vs what you could list the property for either "as is" or in "Market Condition". Considering you bought back in '21 and it was a flip it may have enough cosmetic upgrades that would draw more retail buyers in and you could be looking at a situation where fixing the roof issue would make you more money than selling it as is. But all of that is hypothetical without seeing the property and evaluating the best method to sell.

    Definitely try and give some more specific numbers so you can get advice and opinions on whether keeping the property is the right move (I suspect that it is). And feel free to reach out to me if you want to talk through it, I am happy to give you more of my thoughts on the situation.

    [email protected]757-844-8215
    1Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    2y

    If the roof was new when bought, there may simply be a little section that needs attention. maybe a misplaced nail, or maybe wind ripped off a shingle. flashing?  Find a handyman. Someone who has no problem/appreciates  doing a small job. 

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    2y

    @Kyle Johnson- thanks   1) consider  selling the property " as is "   2) you might ask your PM to get another 1 or 2 estimates for the Roof  3) does the property cash flow ?  if so - consider keeping it 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free