It's hard to admit that you messed up. It's even harder to admit the mistake, have it cost you month after month, and then just walk away from it (in my case, by selling the property at a loss). It's almost like fighting a gamblers impulse - thinking "if I just put in a few more dollars, this machine will pay out".
I did it for years with one of my real estate investments. After initially getting the properties for next to nothing, I spent a small fortune year after year for repairs, court fines and more repairs. I even took out a line of credit to cover the extra expenses.
I was hopeful in the beginning about the future of the area around the property. There was a brand new Motel 6 nearby and more and more businesses were planning to build in the area. Over and over I told myself that if I were to just wait another year or two a breakthrough in the market was sure to come; I wanted to believe that I hadn't made a big mistake in purchasing this home. Needless to say, what I was waiting for didn't end up happening.
Here's just a sample of the problems/issues I had with this property, and why I chose to sell at a loss rather than feeding the nasty slot machine:
- It was costing me a lot of cash every month to service all the expenses;
- Because problems were frequent with the property, my wife and I were tired of the increased stress it created in our lives;
- We had major difficulty finding better tenants than previous tenants we'd had to evict;
- No matter how much work and refurbishing we did, there always seemed to be another problem;
- Although the area was improving, it was doing so at a much slower rate that I had anticipated;
My hope is that by sharing my story, those of you who are in similar situations will be inspired to get out sooner - something I wish I'd done. It would be nice to purchase investment properties that work out just the way you planned they would, the reality is that this won't always be the case. If you end up buying a property that costs you more money than it has the potential to make, here are a few reasons you might want to sell it at a loss:
1. Assuming you make money on the sale of another property within the next seven years, the capital losses from the sale of the money-loser will make a nice good offset for capital gains you realize in the future.
2. It makes absolutely no sense to continue throwing money at a problem that isn't going to change. While it would be nice to hit the jackpot on a property that seemed like a loss, it isn't likely.
3. There is no reason your business should be causing drama in your home life. If eliminating a property means that you can remove relationship problems at home, it might be a good time to sell. The quest for wealth means nothing if you don't have someone to share it with.
4. Owning a negative cashflow property not only costs you money out of your pocket, but can hurt your chances of financing other investment properties because you may not be able to service the debt on the new property.
By the time we finally sold that property, we were so relieved to be rid of it that it didn't matter that we'd lost money. It was a valuable lesson that we were glad to finally get beyond. These days we don't wait so long before deciding to cut our losses. - 29970
I did it for years with one of my real estate investments. After initially getting the properties for next to nothing, I spent a small fortune year after year for repairs, court fines and more repairs. I even took out a line of credit to cover the extra expenses.
I was hopeful in the beginning about the future of the area around the property. There was a brand new Motel 6 nearby and more and more businesses were planning to build in the area. Over and over I told myself that if I were to just wait another year or two a breakthrough in the market was sure to come; I wanted to believe that I hadn't made a big mistake in purchasing this home. Needless to say, what I was waiting for didn't end up happening.
Here's just a sample of the problems/issues I had with this property, and why I chose to sell at a loss rather than feeding the nasty slot machine:
- It was costing me a lot of cash every month to service all the expenses;
- Because problems were frequent with the property, my wife and I were tired of the increased stress it created in our lives;
- We had major difficulty finding better tenants than previous tenants we'd had to evict;
- No matter how much work and refurbishing we did, there always seemed to be another problem;
- Although the area was improving, it was doing so at a much slower rate that I had anticipated;
My hope is that by sharing my story, those of you who are in similar situations will be inspired to get out sooner - something I wish I'd done. It would be nice to purchase investment properties that work out just the way you planned they would, the reality is that this won't always be the case. If you end up buying a property that costs you more money than it has the potential to make, here are a few reasons you might want to sell it at a loss:
1. Assuming you make money on the sale of another property within the next seven years, the capital losses from the sale of the money-loser will make a nice good offset for capital gains you realize in the future.
2. It makes absolutely no sense to continue throwing money at a problem that isn't going to change. While it would be nice to hit the jackpot on a property that seemed like a loss, it isn't likely.
3. There is no reason your business should be causing drama in your home life. If eliminating a property means that you can remove relationship problems at home, it might be a good time to sell. The quest for wealth means nothing if you don't have someone to share it with.
4. Owning a negative cashflow property not only costs you money out of your pocket, but can hurt your chances of financing other investment properties because you may not be able to service the debt on the new property.
By the time we finally sold that property, we were so relieved to be rid of it that it didn't matter that we'd lost money. It was a valuable lesson that we were glad to finally get beyond. These days we don't wait so long before deciding to cut our losses. - 29970
About the Author:
Learn how real estate investments can be the ticket to early retirement with Dave's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to become wealthy with real estate.
