Ideally, your set and forget investment property should be wending its way through life, enabling you to enjoy increased funds and causing you few problems, either with bad tenants or major fix-ups. But even for experienced investors, this isn’t always the case. Here are some tips on what to do if your great investment is, well, not doing so great.
First: Objective assessment
No matter how carefully you’ve researched, planned and hunted for the ideal investment, mistakes and accidents happen. COVID-19 is the perfect example of how uncontrollable life can be!
The majority of property investors make at least one bad outlay in their lifetime and chances are, you’ll be no different. So, don’t beat yourself up too much!
Instead, objectively assess the situation and ask yourself and other experts some crucial questions. Is there a chance the property could grow in value and if so, how much will you need in growth value to enjoy even a small chance of extra cash in your pocket? It could be that the property and its surrounds are experiencing a short-term fall. Then again, it may have been dropping in value for years.
Also, think about the possibility that you could be making more money from your investment than you think. Consider some of the top ways investors usually make money on the property such as cash flow, equity, depreciation, appreciation and rent from tenants. Are all those points looking extremely wobbly or just one or two of them?
Don’t forget too that while you may have dropped into the red due to renovations or maintenance, that same new air conditioner you’ve installed or the upgraded kitchen – a capital improvement – will see you making good money in the future.
To sell or not to sell?
If the answer to the above assessments and questions is negative, selling your investment is your next best bet – and don’t waste time in doing so. It can be a hard decision but this sale is essentially your best exit strategy. The bottom line is there is a chance you could still make some cash – or at the very least, break even – on this property.
So, don’t cripple your cash flow and mental energy further. Cut your losses and sell the home, then take the money and run, hopefully to a better deal!
Waiting for months or years to do this, in the hope, its value will improve, will only increase the pain and see you dropping further into the red.
As we mentioned earlier, go easy on yourself throughout this entire process. Buying an investment property can be a gamble and we can’t see into the future. A substandard purchase is definitely a shame but make no mistake! You can and will recover from this! As with all bad experiences, try to learn from it rather than hiding under a table in a bundle of depression and shame.
Reflect on the situation, why and how it happened, and what you may be able to do better in the future. Now is a good time to reassess your investment goals too.
Get back in the investment saddle
When you’ve given yourself some reflection and reassessment time, throw away any broken pride and get back in the investment game ASAP! If you didn’t do so with your earlier, gone south investment, imagine the worst and plan for a good exit strategy. Then start searching for another property.
Don’t let that earlier flop fracture your anticipation and aspirations.
You can now honestly say that you’re a property investor who knows the ups and downs of this industry and is keen to keep trying. And all while enjoying and learning from, your past experiences.
Go for it and may good investment fortune go with you!
Content originally appeared on The Real Estate Voice
Thanks for reading.
Wishing you a successful day.
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