Out of state rental property exit strategy advice
Hi all.
Here is my scenario:
Bought a duplex out of state last year. I took a HELOC on my primary residence for $200k.
Used 35k down, 12k burned by a nefarious “contractor”, we eventually obtained a real contractor who did amazing work, got it rent ready and cost about roughly same amount as the first and finally got it rented.
Paid the mortgage and HELOC payment for 12 months while the whole debacle was finally resolved and the units are both rented.
During rehab, there was a break in and the furnaces were stolen. Property mgmt advised it was likely covered under my homeowners policy. Come to find out the insurer issued me a policy that didn’t cover vandalism since it was a dwelling policy and not a homeowners policy. The policy is coming up for renewal and I tried shopping around and have been told that either it is not insurable due to an old type of wiring or it will cost 100% more for the policy than I have now.
I tried to do a cash out refi and was told there isn’t any equity to take out. Those funds were intending to go back to the HELOC but I guess not now.
Just today I get notified by property mgmt there was a leak in the upstairs unit bathroom that leaked into the downstairs so that is the next problem in a long long line of problems.
So I have an interest only HELOC that is 50% used, and can’t refi anywhere in the near future and I am at negative cashflow.
Outside of all the mistakes I made, which are clearly vast, what would one of you seasoned investors say I should do at this point? Ride the wave and wait for more, expensive, repairs to come along or cut my losses and sell this property?
This is keeping me up at night so please, no scolding, I just want your opinions for solutions.
Should I keep it and hope it gets better or just get out and start over?