Recently one of my rental homes has become vacant and I was initially just looking at renting it again it but have had an unexpected offer presented to me.
So quick snapshot of today:
Earnings:
job: $88,000
rental 1: $18,000
rental 2: $15,600
basement rent: $6,000
CCB: $11,289
Total: 138,889
After deductions/Tax inc: $93,055
Savings:
Pension: $15,610
RRSP: $3,131
House 1: $13,780
House 2: $5,209
Home: $15,928
Sub Total: $53,658
Bills:
Interest mort 1: $3,286
Interest mort 2: $5,289
Interest home: $9,433
RRSP loan int: $1,519
utilities: $4,812
housing tax: $9,818
house insurance: $2,270
food: $4,560
phone: $900
internet: $924
Sub Total: $42,811
Total Spending: $96,469
Net Income= -3,414 or -284.50 per month
Total Debt: $631k Net Worth: $350k
So far I have been making up the difference each month by doing side hustles here and there.
The opportunity presented would be to purchase rental house 2 for $200k and I currently owe $163 on it. I had an appraisal this summer from the bank for $225k. The individual broke out their reasons for offering less than appraisal as $9k for realtor fees if I had listed it and $6,750 for lost rent if it sat vacant while showing it as average homes are selling in 5 mo in our area(not sure this one matters as much as I would just rent it again not list it) and then finally if we use my lawyer they would pay the $1200 closing fees/title transfer.
One other option they asked if I would consider carrying the mortgage for up to six months. Title still in my name and they would give me $400 per month in addition to agreed to price while they renovate the property prior to taking possession and transferring title. They are interested either way and this is not a deal breaker one way or another.
We have been averaging 1-2 months per year vacancy on this home and those months are really tough. If I cannot make enough on side hustles we end up dipping into short term LOC or family loans. Currently we have them all paid up but a year ago we racked up $35k of credit card/LOC debt at our worst point when we ended up with vacancies at both rentals at the same time for several months.
I paid $175k for the home 3 years ago with $5k down so to walk away with $37k after only 3 years seems a respectable return $5k.
This will set me back an additional $400 per month for three years until I am able to refinance my other aggressive loans. If I invest the $37k I should be able to squeak out $150ish/mo or I could look for another rental/s that has $600/mo of free cash flow and hit a neutral point.
Alternatively I could just put the $37k in an emergency fund to draw down $400-700/mo til I can restructure my other debts.
These are the ideas I have explored so far. Any advice or new ideas are most welcome.
Thanks for taking the time to read :)