Investors all over the country are asking themselves this very thing. Whether you’re in a “reasonably” stable market or one that is still seeing a significant decline in values, the choice of do I sell or do I hold is not as easy to answer as it was say just a few years ago.
Some investors who are still enjoying large amounts of equity in their properties and wondering if it’s time to sell while others are wondering if it’s a good time to make a couple of thousand dollars while they can. There’s no telling where this market is going to go and a few thousand is better than nothing.
When deciding on whether to sell or hold on to one of your investment properties, it will depend on several factors. First and foremost, it ultimately comes down to your financial situation. Plain and simple. But, since there are a lot of factors that make up someone’s financial situation or financial portfolio; it makes it a little more difficult to give clear cut advice. So, not so plain and simple.
But ultimately, what makes this decision so hard? Because now is the time that millionaires are made in real estate. Sure, they can be made in any market, especially in a highly unusual appreciating market like we where in a few years back, but now is the time smart investors build true wealth.
This is where and when people build their retirements. And if you looked over time, you’d find that many more millionaires are made this way than with the quick hit markets. So, regardless of your situation, if you have a property that is cash flowing; even just a few dollars a month and you can afford too, we recommend holding on to it if you can.
The kicker here is that you can this build wealth much more easily and safely now than in other markets as well. Even in the markets that are still seeing declines, they are not as severe as they were a year ago. The market is leveling off making it a lot easier to know the true value of your property and makes it a lot easier to find properties with equity and cash flow value. So, not only would we hold on to our current cashing flowing properties, we’d suggest buying more! Now is truly the time to buy.
For example, property values are significantly lower across the board making it much more likely that you will not only cash flow, in even the most difficult cash flowing markets; but you are able to substantially cash flow.
We’re talking about real income that not only makes a difference in your life now, but will allow you to hold onto the property for years to come so you can take advantage of the appreciation. Which will happen. Regardless of what you hear, the facts are that markets may go up and down but over time real estate gains value. There is no disputing that.
And if you are able to cash flow, you don’t have to worry about the small remaining dips we’ll see in the future. They property is paying for itself. Enjoy the cash and grow your wealth.
Now, there are a few factors that we will need to look at as the “exception” to this rule. First, if you are in a market that is still seeing substantial drops in values and/or a tidal wave of foreclosures and short sales, you may need to look at the bigger picture. In many of these markets rents are going down as well as home values. So, if this applies to you and you are seeing only a small amount of cash flow or even a small amount of negative cash flow, if you can sell for a small profit, sell for the profit.
Take what you can now and don’t look back. I would however take that small profit and investing it into another market that is more stable and which allows you to comfortably cash flow and enjoy your investment. Those have become easier and easier to find.
Next, we also have to look at the many people who are stuck with properties that are so upside down in their value that they are not cash flowing now and are not going to cash flow anytime soon. I would guess that about 20% plus of the markets out there are in this situation. Some investors I’ve met are stuck with properties that are costing them several thousands of dollars a month even with a tenant!
This, of course, would be an entirely different situation as well. The answer here is to meet with your CPA and lawyer and follow their advice on how to get out the best and least damaging way possible. Make sure that both have experience in the real estate field and are well schooled in what you should do and how you should go about doing it. At the end of the day, credit can be rebuilt and probably much faster than the financial damage being done. There’s only so long you can go on spending thousands of dollars a month with no end in sight.
The decision to hold or sell your investment properties depends on several factors including your financial situation, you particular market’s stability, and the cumulative positive/negative cash flow of your current properties
At the end of the day, if you have a positive cash flow than hold it and enjoy the ride up. It may be a few years away but it will go up. But, if you are struggling to make ends meet and need the cash to pay your other bills or if you have a severe negative cash flow situation, them consult your financial/legal team and find out what you need to do and unload the property. For some, it may be the only solution.
