Trying to fix everything through the facepunches

[jfisher3]

My wife and I have done so much right to reach FIRE, but we've also made some mistakes. Also, life happened.

Without getting into details, life situations and choices have left us at a point where we have minimal money to invest into our rental property, but it needs some work.

Going with realtor recommendations for repairs to rent, we'll need roughly $10k to accomplish most of it. We don't have $10k. Also, this is with us doing everything we don't need to be a licensed contractor to do, like gas line work.

What we do have is a mortgage at $109k, with a house valued at $156k. It is not our primary residence, and currently between renters.

My question for the skilled and knowledgeable masses is, how do I unf*** this?

As soon as it's renting, I'll have $700-$800/mo surplus from renting it in which to use for other repairs and to re-build up our savings.

[nereo]

This all starts with a more encompassing look at your financial situation. 
For example, how is it that you own a rental property but you do not have the savings to cover $10k in necessary repairs.
Are you holding on to a lot of debt?  Job loss?  Over-spending?

On the other side of the coin:
do you have access to a HELOC?
can you go bare-bones in your budget for a few months to cover repairs and get renters?
potential side-gigs or assets you can sell (a car, for example)?

Absent these important details, here's my broad advice:
Sell the mortgage property and hope that you can make a $40-50k profit on it.
If you can't afford $10k in repairs you are stretched too thin, and more 'bad things' may come down the road (vacancies, more emergency repairs, etc).

Please report back with a few more details and we may be able to give you more specific advice. 

[jfisher3]

The rental was our former primary residence. We bought the new house back when we had the savings to fix up the old one to become a rental, with a few thousand for a rental emergency fund.

We are holding onto a lot of debt. It was being paid down, but with court costs, attorney fees etc, it cleared out our savings and added some new debt. This month everything will be back on track with our new budget, and July should see some breathing room begin to form. The overtime I was enjoying back then has dried up, and while I'm hoping for it to come back, I'm also not planning for it. I just have a rule that any OT money goes straight to paying off our higher interest rate debt.

I don't know about a HELOC, I've been looking at a refi or other options, but I don't know up from down when it comes to mortgage financials. I've been working on learning, but also looking for suggestions.

Going bare-bones on the budget would net a few hundred a month, but the gain from that would still be less than the loss on the property from paying the mortgage every month. With that said, I'm still currently working on doing that... everything will normalize about midway through this month and then I can actually plan it all out in my spreadsheet.

I'm working on some side hustles, nothing has panned out to much atm, also more than open to suggestions here... I'm good at manual labor and fixing submarines, lol.

ETA: Court stuff is nothing bad... we won the case and have custody, just no savings.

[nereo]

The rental was our former primary residence. We bought the new house back when we had the savings to fix up the old one to become a rental, with a few thousand for a rental emergency fund.

We are holding onto a lot of debt. It was being paid down, but with court costs, attorney fees etc, it cleared out our savings and added some new debt. This month everything will be back on track with our new budget, and July should see some breathing room begin to form. The overtime I was enjoying back then has dried up, and while I'm hoping for it to come back, I'm also not planning for it. I just have a rule that any OT money goes straight to paying off our higher interest rate debt.

I don't know about a HELOC, I've been looking at a refi or other options, but I don't know up from down when it comes to mortgage financials. I've been working on learning, but also looking for suggestions.

Going bare-bones on the budget would net a few hundred a month, but the gain from that would still be less than the loss on the property from paying the mortgage every month. With that said, I'm still currently working on doing that... everything will normalize about midway through this month and then I can actually plan it all out in my spreadsheet.

I'm working on some side hustles, nothing has panned out to much atm, also more than open to suggestions here... I'm good at manual labor and fixing submarines, lol.

All of this paints a picture of needing to sell off this rental property, net the savings and apply it to debt.

Currently you have a rental with a cash-flow problems, sizable repairs, only a 'few hundred' extra each month from your primary job(s), little savings and a lot of high-interest debt.

My advice:  Get out of this!  Sell the home, pay off the debt, rebuild your savings, and THEN, in a few years, you can revisit having a rental property.

[jfisher3]

And therein lies the heart of the issue.

I'm not sure if the house will sell for what I owe. It's not ruined, the structure is fine, etc... it just hasn't been updated since the 90s and other than cosmetic work, it needs a new water heater.

So I'm looking at alternatives for if it won't sell.

[fishnfool]

Just to get it fixed and rented I would do the essential repairs and put it on a 0% credit card if you can get one. Not the best advice, adding more debt, but it sounds like one of those situations where it might make sense. But you'll need to throw the extra rental proceeds back on that credit card and then build up a emergency fund.

I'm only advocating the CC because it might be easier to get vs a HELOC so you can get this rented Asap. I wouldn't sell it if you can't get that equity you think you have. The repairs sound minor. Get going on it!!!

[nereo]

And therein lies the heart of the issue.

I'm not sure if the house will sell for what I owe. It's not ruined, the structure is fine, etc... it just hasn't been updated since the 90s and other than cosmetic work, it needs a new water heater.

So I'm looking at alternatives for if it won't sell.

OK.  From your previous post about your rental having $109k left on the mortgage and being valued at $156k I made the assumption that you should be able to sell the property and generate a small profit.  That may or may not be possible based on your local real estate market conditions, but it's worth exploring and talking to a RE agent to determine if you sell and make a profit.  Right now you are treading water and this would go a long way towards helping your situation.

I don't know about a HELOC, I've been looking at a refi or other options, but I don't know up from down when it comes to mortgage financials. I've been working on learning, but also looking for suggestions.

A HELOC is simply a Home Equity Line of Credit.  Most often (but not always) a person gets a HELOC from the same bank that holds the mortgage.  If your mortgage rate and credit scores are good, you should be able to call the bank and they can tell you if you can get a HELOC and what the rate is.  A common limit is 80% of the value of the home minus the remaining mortgage (in your case $156k * 0.80 = $124.8k - $109k = $15.8k.)
Many people can get HELOCS right now with about a 4% interest rate (sometimes less - ours is 3.54%).
Getting a HELOC is faster and involves fewer fees than refinancing - something you need right now if you plan on holding onto this property. It should take you literally  no more than 30 minutes at the bank.

If you decide to keep the rental you need to get renters in there ASAP.  This means that if paying a tradesman 1 months rent more than it would cost you to do it yourself allows you to get a renter in there 1 month earlier, you call the tradesman.  It also means you spend every evening and weekend fixing, painting and repairing until its rented.  Until you have renters this property is a giant stone around your neck dragging you further down every month.

Once you have rentals and have the additional $700-800/mo cash flow aggressively pay down your high interest debt and rebuild your savings.  There *will* be additional large expenses down the road, and it's hard to predict whether they will happen in 6 months or 6 years.