Negative Rental in high end area of Chesapeake, VA (Great Bridge)

5 Replies

I am currently renting out my former primary residence in Chesapeake, VA for $2400 a month (built new in 2001 with some upgrades over the years). I moved to the NOVA area a year ago and have a realty company providing property mangement. House is 3500 SF on 1/2 acre on cul de sac, w/inground pool, expanded deck, outdoor kitchen/roofed grill area, fenced, sprinklers, excellent shape, etc. It was supposed to be my forever home, but life happened.

Current tenants have a lease that ends in June 2019. Problem is the 1st is $280k and the 2nd is $88k. After mtg, 2nd, taxes & insurance I'm in the hole about $800 a month. Comparable homes in the area go for anywhere from $420 to $500k+ depending on subdivision. I could work on paying down the 2nd, but that would take about 5 years to get any benefit. 

Should I try to sell it as a turnkey rental property to another investor, or keep it and pay down the 2nd? 

Just looking for feedback. Been waffling about what I should do...

Your home sounds beautiful.  My first question to you is what is your goal?  Is your intent to move back into that home in a few years?  Are you looking to invest in real estate to offset monthly income?  Or are you banking on possible appreciation and cashing out later?  Your answer would dramatically impact your decision.

Like you mentioned, you're in the hole 800/month.  That's really painful to be subsizing someone's rent.  If you plan is to move back in sometime soon, maybe that's not so bad... you'll be back in your old home.  If you think the home is going to continue appreciating, maybe it's not so bad to subsize 800/month.  Just remember, that's nearly 10k / year.

If you're looking to build income... I would seriously reevaluate your situation.  Could you take your possible 500k of finance-ability and purchase a property that could at least yield you +$'s monthly.  It looks like you're okay with investing at a distance through the use of a property manager... I do believe there are markets in the US that would yield you +$'s on a monthly basis.

Sorry I can't give you a direct answer, but I'd be glad to help bounce ideas if you need a sounding board.

Chheang Yang, thank you for your comments. I really just needed to get some different perspectives on this. My home is gorgeous and it was supposed to be my forever home. I initially intended to only rent for a few years and then come back to the area. Now, since I have moved to NOVA area and have started my business, I have been rethinking it.

I never thought I would be ready to sell it. But based on the comps, taxes, rent, etc., it is sounding like I may do better to just let it go. Problem with that is, I maybe coming out negative still even with a sale. I'm thinking if I just pay down the Heloc over the next few years, that will bring the 1st mortgage down to less than $265K (it's a good rate at 3.75%). Then if I do decide to sell it, at least I won't be in the negative. 

I am looking to build an income off of this 1st mortgage and buy additional properties.  I just bought a town home in the Woodbridge area which will be my primary residence for a coupe of years and then I will rent that one out too. 

I looked into refinancing the mortgage but it was not at 75% LTV, so...that's what leads me to here to bounce this scenario off of folks....


Hello,

The house sounds wonderful! It is tough to get rentals in that area for over what you are getting. Do you have an HOA? Inventory is low for listings right now so it should be easy to sell. Is refinancing out of the question?

Krissie Cole

Realtor

Better Homes and Gardens Real Estate

Virginia Beach, VA

@Kris Cole, it's a great area, I just owe too much on my 2nd to refi. I will go ahead and keep it and focus on paying off the HELOC. Might even use some to finance my flip expenses...

I do have a good PM and the expense are pretty low as far as maintenance goes, no HOA (thank GOD).