Hey everyone,
Asking for some guidance on a property I would like to keep however do not have positive cash flow if I were to rent out now. I am a novice in the rental property profession but am making it my focus on top of my wife and I both working full time jobs.
I currently live in and own a property in Georgetown, Texas north of Austin. I purchased the 2 bed / 2 bath 1330 SQFT townhouse in 2022. The intent was to live in for years, refinance and move out to make it my second rental property. My first property has positive cash flow (not a ton) but has paid for itself for 4 years and appreciated a bit.
Stats:
- Purchased for $305,000 in 2022, 6.75% interest rate. Estimated current market value $280,000. based on a 3 bed/3 bath selling last month for $306,000 next door.
- New build, first to live in it
- Mortgage: $2,577
- HOA: $250/mo
- 2 bed / 2 bath, 1330 SQFT.
Based on similar houses in my neighborhood, I could rent this for $1900-2000 a month.
Surrounded by a nice elementary, middle and high school within a few miles.
Lower home price for the area compared to the median.
I see property values truly appreciating in this region over the next 10 years. The local area continues to grow aggressively.
I will be moving around FEB/MAR of 2026 and would like everyone's opinion on how to move forward.
Option 1: Place $30-40,000 and refinance to operate at a smaller loss of $150-250 a month for the foreseeable future. This is assuming I can rent this property for $1900-2000/mo.
Option 2: Sell and take a $30-40,000 loss. Not ideal.
Option 3: I am hoping this is where this forum helps. Unsure what else I can do.
I understand I bought during a high interest rate time and a local Austin, TX bubble. However, I think this property will appreciate greatly if I can hold for 10 years.
Thanks all!
Potential Rental Property however underwater with the Mortgage. Options?
byu/deathbykillz inrealestateinvesting
Posted by deathbykillz
5 Comments
You’re not factoring in vacancy, repairs, etc into this equation. Can you covert the $500/month loss PLUS come hon with cash for repairs, pay the full mortgage if it’s empty, etc? If not, you need to sell.
How much is your annual income? How much do you think you can afford to realistically be negative per month on average long-term?
My first thought is too pay the mortgage down and re finance so you will be at least break even on cash flow. Maybe you can strategize with your wife to save money from the two full time jobs so your only have a negative cash flow for a couple of years then re finance
If you’re interested in being a landlord the plus is it’s new, no major repairs are expected soon. Con negative cashflow. Ideally you can refi to a lower interest soon to help with that. I’d hold if you can easily handle vacancies shouldn’t be more than one month between tenants. They will pay it off for you over time.
What is your principal? That area is going to appreciate aggressively with all the Tesla transplants from California. It’s either lose now or lose slowly later. I always bet on myself in the future. Being it’s new I would shoot for top of the market and high income earner and raise rents 3-4% per year. You should be cash flowing by year 5.