My Rental Property is Costing Me Money. What Should I Do?

Bigg Challenge
Jeff’s job took him several states away from a rental property that he bought about two years ago. He bought the property and fixed it up. Now his tenant is moving out and the place is a mess. So he’s going to have to invest a bunch again. But he feels he has no choice since he has so much in it already. Besides, it’s a bad time to sell real estate. He wants our thoughts on his situation.


Bigg Advice

It’s been said,

“Find a landlord who lives more than twenty minutes from his
rental and you’ll find a landlord who’s probably ready to sell.”

Properties can be managed across cities and states, but for the most part, real estate is a very local business. And, a lot of people don’t understand that you’re in business even if you only have one rental property.

Consult with a good attorney

You’ve treated this like a business, Jeff. You had your tenant sign a lease. But a lot of landlords feel like there’s little recourse if a tenant tears up the place. However, you can take legal measures against a tenant who causes damage beyond normal wear and tear.

So consult with an attorney to explore your options. There’s a good chance your attorney may handle your case on a contingency. Of course, you’ll still have to cover the courts costs.

Sell!

Check with a realtor, and even other property owners, to get an idea of what to expect if you list your property. Of course, you won’t know until you actually put it on the market, but you can probably make a reasonable guess with some more information.

Sure, we hear news reports that the real estate market is down. However, you may find it’s not as bad as you think. And here’s the thing … isn’t it better to fix it up and let it sit empty than to fix it up just to fix it up again if your next tenant does the same thing?

Distance makes the difference
Every landlord risks bad tenants, but since you live so far away, Jeff, it seems like the best move for you. The only other thing you might consider is contracting with an experienced local property manager to handle the leasing and maintenance.

You sunk my battle ship!
Picture a ship that’s sunk. You can invest money to try to make it float again, or you could just leave it on the bottom of the ocean and get a different ship. Hopefully, you quickly see which one of those two is better.

George said that, unfortunately, he’s learned this the hard way. It’s not easy when you’re the one in the middle of the situation. But the money you’ve already invested is a sunk cost, like the sunken ship. Don’t base your decision today on money that’s already been spent. Base it on what kind of return you can get on the money you will invest. If it’s better elsewhere, cut your losses and move on.

We hope this helps you with your bigg decision, Jeff. Thanks for sharing your Bigg Challenge with us!

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5 replies
  1. Steve
    Steve says:

    I owned a rental property once and had the same problem. I sold it and never looked back. Glad not to have the headache anymore.

    Reply
  2. Ken Pirok
    Ken Pirok says:

    Yes, a owning a single rental property is the same as owning a small business. It takes effort and planning. You need to get a security deposit, have a good lease, keep up with maintenance, advertise, screen new tenants, and collect rents.

    Sounds like you’re stuck having to fix it up again; whether you sell or rent, you’ll maximize your profit by having a nice place. You may try to find an apartment association. They exist on a national, state, and even local level in most places. Their resources may help you as a landlord, and their members may be good property managers if selling just isn’t the right choice for you right now.

    Reply

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