Accidental Landlord Bleeding -$700/mo in Copperas Cove, TX (Fort Hood): VA Loan @

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

3w

It's unfortunate you're in this situation.

Thoughts on your options:

1) Sell Now
Bringing $30k to a closing will result in how much of an overall loss?

2) Sell when tenant vacates
If value stays at $280k, how much will you still have to bring to closing?

Also, how much will you need to spend after the tenant vacates, to put the house back in "pristine" condition to sell at highest price?

3) Lease-Option to Owner-Occupant
What are the chances a buyer will want to pay at least $286k and $2300/month?
Check the market with your agent to see if possible.

4) Lease-Option to Investor
What are the chances an investor will be able to find:
- A buyer willing to pay at least $286k and $2300/month, so they make money?
- A tenant willing to pay OVER $2300/month, so the investor can make the difference?
Check the market with your agent to see if possible.

Why can't you just find this buyer or tenant?

5) VA Assumption
Probably your best bet is to find an owner-occupant to assume your mortgage.

Hopefully, by doing so their property taxes will be lower.

The attraction would be your 5.99% interest rate vs today's going rates around 7% - otherwise, why wouldn't they shop for other houses?

NOTE: be sure you understand if an assumption will 100% release you of liability on the mortgage - you don't want the buyer to stop making payments and damaging your credit!

6) Short Sale
These were popular 2010-2014 and are starting to come back.

Your lender will have to accept and you will need to understand:

1) Negative impact on your credit
2) Income tax consequences on any forgiven debt amount

3) Repayment liability on any short sale amount.

One last thing - yes, you're losing almost $700 in cashflow, but how much of this is really a LOSS?
1) As you pointed out, $4k annually is reducing the balance of the mortgage

2) Assuming the other $4k annually is interest, how much of it are you writing off on your income taxes?

3) Same goes for property taxes and insurance.

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2 Reply

Minna Reid

Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes

3w

No investor is going to touch this anywhere near your numbers because they wont work for any investor, and an owner occupant can't buy this. I would wait the tenant out so you can sell to an owner occupant, which will minimize your out of pocket loss at close. If you don't have the funds to cover the loss, you may want to consider a short sale, but you really can't even do that until that tenant is out. The lender will also expect you to get close to market value, and no one will pay that and pick up your tenant with the property.

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Diana KhanPro Member

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 563 posts · 197 votes

3w

Quote from @Jeffrey Figueroa:

Hey BP Community,

Looking for some candid feedback from seasoned Texas investors and anyone operating in the Fort Hood / Killeen / Copperas Cove market.

Property Overview:

Type: Single-Family Residence (4 Bed / 2 Bath, 1,827 sq ft) in Copperas Cove, TX

Purchased: July 2024

Financing: VA Loan originally ~$294k @ 5.99% fixed (30-year)

Current Balance: ~$286,000

Current Rent: $1,800/month (Leased through March/April 2027)

The Monthly Cash Flow Reality:

Gross Rent: $1,800

Property Management (10%): -$180

Net Rent Received: $1,620

Mortgage (P&I + Hazard): -$1,850

Property Taxes: -$454

Net Cash Flow: -$684/month (out of pocket)

The Tax Shock:

We originally purchased under the expectation of a 100% disabled veteran property tax exemption (Texas Tax Code § 11.131). When we relocated for work in March, we learned the hard way that § 11.131 is strictly a homestead exemption. On a rental property, it resets to § 11.22, which only knocks off a flat $12,000 from the assessed value, leaving us with a $454/mo tax bill that completely inverted our cash flow.

Our Agent’s Recommendation:

We spoke to an agent about selling. Her advice was:

Selling with an active tenant is tough because primary-residence buyers (VA/FHA) can't occupy within 60 days.

With comps around $265k–$280k, after 6% agent commissions, seller concessions, and closing costs, we'd have to bring $20k–$30k+ cash to the closing table.

She recommended "waiting 1–2 years."

The Problem:

Waiting 2 years burns over $16,400 in out-of-pocket cash bleed, while only paying down roughly $8,200 in principal. In Copperas Cove, where inventory is heavy and appreciation isn't guaranteed, we feel like waiting is just a slower, guaranteed way to lose capital.

Questions for the Forum:

VA Loan Assumption: How active is the market for VA assumptions around Fort Cavazos right now? At 5.99%, would an inbound service member be willing to assume this loan with an Entitlement Substitution, given there is virtually no equity gap to bridge?

Lease-Option: Has anyone successfully run a lease-option/sandwich lease in Copperas Cove to cover the negative spread until the market moves?

Hold vs. Cut Losses: If you were in our shoes, would you fire the PM, ride out the lease until spring 2027, and sell vacant—or write the check at closing now to stop the bleed?

Appreciate any insights or creative ideas you can share!

@Jeffrey Figueroa, I’ve worked with property owners in situations where the monthly loss made everyone want to move quickly, but I would slow down just enough to make sure the exit does not create a new problem.

Before choosing between selling, a VA assumption, or a lease option, I would put the current lease, loan documents, title information, and the servicer's written assumption requirements side by side. I would want to know exactly what you can do while the tenant is still under lease, whether an assumption fully releases you from the loan, and what obligations you would still have after any transfer. I also would not add a lease-option on top of the current situation until the existing lease and financing documents have been reviewed together.

I’d be glad to stay connected, @Jeffrey Figueroa. You already understand the numbers. At this point, I think the bigger question is which exit actually gets you out cleanly without trading a known monthly loss for a harder legal problem later.

Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

2w

I've done a few assumptions on VA loans in military markets and this situation actually has a path worth looking at before you decide to bring $25k to a closing table.

If that loan is a VA loan at a rate under 4.5%, the assumption angle changes the math completely. A buyer assumes your existing loan balance, whatever it is, and takes over the payment at your original rate. At Fort Hood especially, there's real demand for low-rate assumptions because a lot of buyers there are VA-eligible anyway.

The equity gap is the question. If you owe $240k and the home is worth $270k, a buyer needs to cover that $30k gap in cash or a second lien. That's a better position than you bringing $25k to sell. You'd walk away with nothing but you'd also stop the $700/mo bleed, which at 12 months is $8,400 you'd save versus waiting to save up for a traditional sale.

The tenant complicates it a little. VA buyers need owner-occupancy, so the assumption would need to close after the lease ends or if the tenant agrees to vacate early. Worth checking when that lease is up.

The other option people in your position miss: a non-VA buyer can assume a VA loan too, which opens the pool significantly. Your VA entitlement stays tied up until the loan is paid off (unless another vet assumes it and substitutes entitlement), but that's a future-loan consideration, not a now problem.

If you want to run the actual assumption numbers on that loan, DM me the balance and rate and I can tell you whether it's worth pursuing.

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Victor Ramirez

Member since 2026 · 25 posts · 5 votes

Tough spot. Since the lease runs through spring 2027, one option is to ride it out, sell vacant in spring when the buyer pool is biggest, and use the time to talk with a VA-savvy loan officer about whether an assumption buyer is realistic near Fort Cavazos. A 5.99% assumable rate isn't a huge selling point today, but it still beats new rates for some buyers. I'd also have a CPA weigh in, since rental losses and depreciation may offset part of the bleed at tax time.

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

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Jeffrey, this is one of those situations where I would separate the tax issue from the investment decision. The $454 monthly property tax clearly changes the cash flow. On the numbers you provided, you are already about $684 negative each month before considering other ownership costs, so I would not assume that simply waiting for the market to improve is automatically the best answer. At the same time, I would be very hesitant to give up a 5.99% VA loan without modeling the alternatives carefully. If you sell now, you have selling costs and potentially a cash requirement at closing. If you hold, you have the ongoing negative cash flow and the risk that the market does not improve as expected.

I’d run three scenarios side by side: sell now, hold through the existing lease and sell later, and keep it as a rental longer term. For each one, look at the actual cash you put in, principal reduction, expected appreciation, selling costs, and after tax outcome. The tax side is particularly important here. The homestead exemption and the rental property tax treatment are separate issues, and I would have a Texas tax professional confirm exactly what exemption applies now that the property is no longer your primary residence.

I’d also make sure the conversion to a rental is properly documented for depreciation purposes. Depreciation can help reduce taxable rental income, but it does not make a $684 monthly cash loss disappear. If the property is clearly bleeding cash and there is no strong reason to expect the economics to improve, selling may be worth considering even if it means taking a loss at closing.

Feel free to DM me, I’d be happy to send over our Turn Key Rental Analyzer so you can compare the hold and sell scenarios using your actual numbers.

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Jeffrey Figueroa

OP

Member since 2026 · 2 posts · 2 votes

Thank you everyone for the candid and detailed breakdowns—this is exactly the level of scrutiny I was looking for.

Rather than replying individually, here is an update on where things stand and how the numbers shake out based on your feedback:

1. Tenant Update (Par Assumption Declined)

We gave our current military tenant the first right of refusal to assume our 5.99% VA loan at par value (~$286k loan balance, $0 equity gap to bridge). Unfortunately, they aren't in a financial position to purchase right now. That eliminates an immediate off-market sale and leaves the lease in place.

2. Scrubbing Off the Table Options

Short Sale: Completely off the table. Our credit and financial solvency are intact, and taking a multi-year credit hit and security clearance exposure over a manageable monthly gap makes zero sense.
Lease-Option: Off the table. Beyond the unrealistic prospect of finding a buyer willing to pay above-market rent in Cove, Texas Property Code (Chapter 5, Subchapter D) makes executory contracts on properties with existing liens a massive legal liability.
Self-Management: We live out of town and prefer to keep professional property management in place rather than taking on remote landlord duties for an extra $180/month.

3. The "Tax Write-Off / Not Really a Loss" Reality

To echo what the CPAs noted (@Divin Kanyama and @Ashish Acharya): paper depreciation and Schedule E write-offs do not replace real cash. Bleeding nearly $700/mo out of pocket is ~$8,400/year leaving our checking account. A 22% tax deduction only softens that blow by roughly ~$1,800—we are still net out-of-pocket over $6,500 every 12 months. Counting on modest Cove appreciation to outrun that bleed is gambling, not investing.

4. Loan & Market Specifics (For the Assumption Angle)

To clarify for @Ryan Thomson: our fixed rate is 5.99%, not sub-4.5%. However, with current 30-year market rates hovering near 7%, a 5.99% note still offers a noticeable monthly savings. More importantly, with our loan balance at ~$286k and comps sitting in the $265k–$280k range, there is virtually zero equity gap for an incoming buyer to bridge with cash.

5. The Plan Forward

Because owner-occupants (VA/FHA) need to move in within 60 days of closing, and mortgage servicers typically take 60–90 days to process an assumption package, our strategy is down to two paths:

Path A (Open-Market VA Assumption): Market the home early to inbound PCS service members willing to execute a full Substitution of Entitlement (SOE) and Release of Liability, timing the closing date to coincide with the lease expiration so the 60-day occupancy requirement is met cleanly.
Path B (Vacant Retail Sale): Ride out the remaining months of the lease, issue formal non-renewal notice, absorb a modest turn/make-ready, and list the home vacant in the peak spring/summer PCS window when owner-occupant retail buyers are most active.

For those active in the Fort Cavazos / Bell / Coryell market: Which local title companies and investor-friendly agents have actual, recent reps closing VA assumptions with Entitlement Substitutions smoothly?

Appreciate all the input!

Adam Summerer

Lender · Franklin, TN · Member since 2026 · 98 posts · 23 votes

Path A is worth running, but request your servicer's assumption package and their current timeline now rather than when you list, timelines vary a lot by servicer and you want that baked into the lease-end date. Also, if your best buyer ends up being a non-veteran, your entitlement stays tied to that loan until it's paid off, which matters if you want to use VA again. On the sell side, the buyer only pays a 0.5% VA funding fee on an assumption (and none if they're exempt), which is a nice point to put in the listing.

Harrison C.

Member since 2017 · 58 posts · 27 votes

One path I dont see in here. Its a 4 bedroom next to a base.

When the lease ends in the spring you could rent it by the bedroom instead of to one family. Single soldiers and contractors rent rooms all the time. I do this with my houses, rooms run $600 to $775 each where I am. I dont know Cove rents, so look at what rooms go for on Marketplace near post. But if its even $550 a room, thats $2,200 against the $1,800 you get now.

Honest downside, its more work. More people, more move ins and outs, and the utilities stay in your name. I do mine in my own town. From out of state you'd need somebody local you trust, and most managers wont do rooms.

Might not beat selling. But I'd price it before I wrote a $20k check at closing.

Jimmy Samaha

Staten Island, NY · Member since 2013 · 13 posts · 0 votes

4h

Ran your numbers the way a buyer would. $1,800 x 12 = $21,600 gross. Taxes alone are ~$5,450/yr, add insurance, 8-10% vacancy/repairs and you're probably at $13-14k NOI best case. On a $265-280k value that's a ~5% cap before management. So a straight investor buyer isn't going to bail you out on price, and that's not on you, the tax change is what broke the deal.

What I'd actually compare:

- Hold till lease end: ~$684 x ~17 months = ~$11.6k out of pocket, minus ~$6k of principal paydown. Net cost is maybe $5-6k, and it only works out if prices hold.

- Sell now: $20-30k to close per your agent. Before you take that number as final, ask her to break out the 6%. Buyer agent comp is negotiable now, and on a tenant-occupied house you can sell to an investor with no concessions. That could knock several thousand off.

- Assumption: at 5.99% it's not much of a carrot vs. today's rates, so I wouldn't count on it.

Honestly the cheapest-looking path to me is to hold through the lease, cut PM if you can handle it remotely (that's $180/mo), protest the assessment, and sell vacant in spring when the VA/FHA buyers are back. Get a tax pro to look at the rental loss deduction too, it changes the real number.