Is this rental property worth keeping, or should I sell?

Financially, it's hard to say, if you don't screen tenants thoroughly enough or just get unlucky then the extra costs/hassle could eat your profits and your sanity. It sounds like you've hit a lot of big ticket items so you might be set to coast for a few years with higher rent which would be especially lucrative if you could do without a property manager (or at least do without one that costs so much).

If you haven't lived in it 2 of the last 5 before selling you can't claim the capital gains exemption, so you'd want to factor that in. You've also got 3 years of depreciation expenses that would be recaptured if you sold now. Neither of those are deal-breakers, if you are just done with being a landlord then take your tax lumps and move on.

I enjoy having rental property as a substantial part of my portfolio, I view being a landlord as a part-time job that I can continue into retirement. Also my area is lucrative for rentals and seems likely to continue to be so due to high projected growth. If you don't have confidence in your area and are on the fence about being a landlord, might be time to bail.

After Management fee, you have $19,000.

Tax, Ins, Int, $7500. Call it $11K left.

There seems to be a lot missing, the other line items from the Sch E would help. No grounds maintenance? Snow in winter, grass in summer?

The numbers for the roof, appliance, etc need to be looked at, but over their lifetime. The roof, for example, should last, say, 20 years, and should be thought of as a $400/yr 'sinking fund' cost. Same for appliances. Once you account for all of that, it's still a personal choice. Every year, it's "Would I rather have $X ($80K gross, if you sold now) or the cash flow plus potential appreciation of the rental?"

In '14, I bought a 3 family (i.e. 3 apartments) house. It cost $180K after major renovations, including roof, most appliances, etc. When put into service, it rented for a total $2000, since rising to $2650. The first few years had some tenant issues, and it felt as if the property was a bit positive in good months, but needed some cash during an apartment turning over. The last 2-3 years saw the rising rents, and tenants settling in longer term. The $180K has been paid down to $130K. (Note - it was funded 100% from an equity line, so, in effect "zero down".) As it gets paid off, I have the same question, an asset worth about $220K, would I prefer to keep it, or sell, and invest that elsewhere?

In the end, it's a small portion of my retirement plan. The manager is a neighbor whom I work for for a few years, and they charge a reasonable monthly fee. I trust them, to the point where they know to 'not' call me for random small issues. In your case, is it a concern? A very different experience using a manager vs having to arrange for every minor repair yourself. Also different to have a long term tenant, with modest, accepted rent increases along the way, than to have an annual turnover costing a month's vacancy, a commission to re-rent, and clean-up / minor paint job each time.

Looks like you've already spent all the big $$$ that you're going to need to spend for a while. You should have your property management company go after the previous tenant for all the damage. You're not limited to just their deposit if they caused a lot of damage. Your property management company should have told you that if they're worth what you're paying them.

Anyway, if you're bringing in any sort of profit on the thing year to year, it's worth it because your house will appreciate in value over time. I've had my rental for about 10 years and the house has gone up $100k in value during that time. So as long as I'm cash flow positive, or close, I'm earning a LOT of money on appreciation as the house value goes up.

That being said, if you don't like the hassle, don't do it.

It also depends on your purpose. If you do this for 10-20 years, you'll eventually have the house paid off and have nice residual income as well as a nest-egg for retirement. If you're wanting quick profits, this probably isn't the thing for you. But slow and steady does win the race when it comes to rentals. They can be your retirement account.

Another thing to consider is being a bit more careful with expenses as far as fixing it up and paying for repairs. $3000 in appliance repairs sounds pretty steep. You can put used stuff in there and it doesn't need to be top of the line if it's for rentals. Get better deals on repair jobs or replacing things. Don't use High end carpet if you're replacing it. Assume it will be trashed every few years and need replaced. Get cheaper stuff and your replacement costs go down a bit.

It's a lucrative investment if you stay in it for several years and are looking at long-term gains vs quick $$$.

In your calculation about selling, you need to remember also that it costs 10-11% to sell. If you keep it as a rental, have you checked what other people are charging for rentals in the area for the equal size and condition? I have 5 rentals and keep the rents below the market, so I can pick my tenants from a larger group, and then I am Real Picky! I've owned all of them more than 30 years. I also don't raise the rents often. It has paid off. My rents have all come in faithfully during the COVID-19 pandemic. They may be late, but I've gotten every one. I called each of my tenants when this started and told them that I would not be charging any late fees, even if they got behind. I only have 1 tenant who has been with me less than 10 years. I've tried property managers, but was unhappy with them all. (It does sound like your property manager is ripping you off. Does he handle the repairs, if so he may be getting kick-backs or something. My last one was.) The 10-11% is in So.California. It assumes 6% Realtor Fee (our "normal"), + Escrow Fees, Title Fees. & the usual garbage fees.

Sum of total expenses so far: 6500+3000+9000+(175x3x12)+(7500x3)+15000 = 62300 $

(You must also factor in the time spent refurbishing the house, if the Property Manager does not do that on your behalf. I don't know how much do you value your time. Let's keep it simple and put it as 0 $ for now.)

Sum of total revenue so far: 1750x3x12 = 63000 $

TOTAL BENEFIT: 700 $ in 3 years.

You invested into a property to get 233'3$/year of profit, or 19'44$/month. Now that the figure is shown in detail, you may determine better if it works for you or not.

The big benefit so far comes from the fact that the house won value and you can get 55000$ more if you sell it and walk away with the profit.

As a comparisson, if you purchase stock to target and get 5% revenue from dividends only, a 200k investment yields 10k per year, without refurbishments. Obviously, please, please take this with a grain of salt. The abovementioned statement assumes a lot of things about the stocks market that may not become true.

Do what the catholics (the institution) do, they never sell properties since even if they don't appreciate this year, they will in a 100 years and leaving property in your estate for your children and your children's children will benefit.

It seems right now you're working for the tenants with all the expenses, let me remind you, they and your money need to work for you. Some not so popular advice which I strongly agree with, put in as little work as you can with repairs/renovations. People will still love to rent what you have. Right now you're paying for someone else to live in your house...

If you have a property portfolio less than 10, get rid of your property manager - obviously they're not doing their job. It's easy to find a tenant and do a review yourself using Zillow property manager or tools easy and cheap to use. People are in need of housing and you can find some good ones out there. Instead put that $150 into your principle and get your rental paid off sooner for that additional interest savings.

A rental is a place you have to be extremely conservative and stingy in order to maximize your profits end of the day. Some ideas to cut fixed costs:

1. Refinance and take advantage of low interest rates.
2. Seems like with the high expenses in the past 3 years, you are hiring out your work. Learn how to fix/maintain property yourself. Regarding the roof, you lived for the last 10 years and it was fine. What was the problem on year one of rental? Could you have just did a patch job to fix a leak or two? Why does someone else have to benefit of a new roof when you lived with the old? Repair instead or replace until replace is cheaper than repair.
3. Shop around and find a lower cost landlord policy

A rental is definitely less profitable than some stock market ETFs but its consistent, reliable and you have something tangible at the end of the day that brings that sweet sensational feelings of being a landlord.

As other alluded to, it's what you want to rather deal with. Tenants/ physical labor at the house or do you want to kick back?