HOA and taxes are paid by my parents from a fund they have for us. The rent is something like $1350 and we keep $1250. So technically yes the repairs and such will come out of that $1250 or whatever we make from work. This past year we had zero repairs, and minimal before that. The house was built in 2007. I know things still happen but that's the picture thus far.
I know it's not what you want to hear, but you are not getting much of a return at all on this house. I remember seeing a breakdown someone did that factored in replacing all big ticket items (hot water heater, roof, HVAC, etc.) and that landed at an average of $238/month/house minimum (and he was trying to make it a small number). That's not including repairs or improvements. Let's pretend that brings your monthly profit down to $1000.
What are your property taxes and HOA fees? Those are eating out of your $1000/month that's left. Same with insurance. If we pretend by some miracle those and repairs combined are less than a long-term average of $500/mo ($6000/year), that puts you at only $500/mo ahead. $6k/yr on a $265k asset means you're looking at a 2.2% real return. Not good for real estate.
I know I hand-waved a lot of numbers. Feel free to plug in your own. But this doesn't look like a winning rental on the back of the envelope. It "feels" like a winner because it's paid off and you don't have maintenance coming home to roost yet, so your present cashflow is high. I'd say you need to either raise your rent substantially if your market bears it, or realize your appreciation gains and cash that sucker out soon. I think you said you owned it six years? $132k->$265k in six years is a 12.3% IRR on just appreciation. You already won!
When I asked our property management company back in December if they thought it was okay for me to raise rent by $50 they said they were shocked I hadn't raised it by $400 or more lol.
There's a reason for that. You're losing money by not renting it out at market rate. Everywhere I've ever rented has raised the rent each year (as have I with rental properties). The only exception is my current house (long story but it makes total sense, it's a 100+ year old farmhouse in bad condition that nobody wants to live in - not at all your situation). It's what every investor does - price at market rates. If you want to "be nice," donate to charity. Would you hand your tenants $400/month cash? You already are. If you want to have a decent investment, rent at market rate.
2.2% on an illiquid higher-risk asset is not something I'd stick with. That's inflation if you're lucky. Juice that return somehow, or take your cards home and sell.
EDIT: If this comes off as super harsh, I apologize. I'm a nice guy, I promise. :D
