All Forum Posts by: Gabe Walters

Update on this.  So the property is losing more now and we aren't close to breaking even now.  Overall it lost $7000 last year and will likely lose $10,000 this year.  Property values have gone down even further and I don't see them appreciating for quite awhile.  There is just too much competition and the rental market is down in the area.  If I sold now I'd probably lose my whole investment but I don't know if I can continue to float that big of a loss every year without eventually diluting my savings.  At what point do I just cut my losses, take the massive hit, and then start investing that $1000 a month I'm losing.  Even if I hold for 5 years I don't see it appreciating much if any.  Our other properties revenue is down as well so it's not enough to cover the losses on this property.  I'm definitely regretting purchasing this one.  What's the best move? 

That makes sense.  I appreciate it.

Quote from @Jonathan Greene:

I think it really helps to have a third one in the same area because when you cluster you have options just in case. You aren't able to identify anything that sets this one apart as the only loser of the three? If you paid up for furnishings and experience, is the location any different than the other two?

That is a very saturated market for STR so I do think it makes sense that 1/3 is underperforming, but based on taking a loss now, I would probably stay tight and keep going because you have the set up in the area. If you take the money out at a loss and reposition it into a different market, you need a new team.

Thanks for the advice.  To me it's hard to explain.  It's in the basic same area as our other two and set up very similar, it just doesn't have the it factor of the other two I think.  It's a little smaller but not much.  If I were picking between the 3 it would definitely be my last choice.  I don't really know why, but that is the case.

I've looked for ways to improve it, but I think I've done all the little things I can.  Anything else would be a major cost, like adding a large deck facing the mountains.  I do think that could boost revenue, but I'm weary to put more money into this property.  

Quote from @Collin Hays:

I am unclear as to how much you are actually losing on the property.  $2000-3000…per month?  Per year?

Sorry, I should have clarified.  Last year we lost $3500 total.  We are currently down $4500 for this year, but we will chip away at that the rest of the year now that we are in peak season.  I estimate we'll probably have a similar loss this year after everything.  We were (-$500 ) on rent so that part almost broke even, and then we spent $3000 on cap ex.  

I'm looking for some advice on whether I should sell one of my properties. I currently have 3 short term rentals in the smokies. The last one I purchased was right at the peak in March of 2022 and when rates started to rise. For whatever reason this one just doesn't perform as well as our first two. The last two years I'm basically breaking even on the rents, but after cap ex I'm out $2000-$3000 so far. Demand in the area is definitely down, competition has increased, and values have gone down since we purchased it. I do think we could sell it for slightly more than we sold it for, but we put around $40k into it for renovations. Then when you add in realtor fees, etc, if we sold I estimate it to be around a $35k-$50k loss. I'm a small time investor so that kind of loss is gigantic. So I'm just stuck on what to do. I put around $100k into the property, so we would get around $50-$60k back if we sold it. Should I just sell, take the huge hit, but then use that $50k-$60k for a better investment? Or should I just hold onto it , hope if breaks even or has a small loss every year, and pray that it gets better or values go back up eventually. The cabin is in great shape after all the renovations, in a great location, and has a small mountain view. But every year we are just one big maintenance issue away from a hefty loss. If it were $10k-$20k loss I'd probably just chalk it up as a learning experience and sell it, but I just don't know if I can stomach a $40k-$50k loss. Lastly, our first two that purchased were home runs so can float the monthly losses, but it's always going to cancel out our good returns on those. Overall this one will make me a better investor down the road, and has definitely made me more conservative when analyzing properties. Any advise would be greatly appreciated.