Real estate investors enjoy the thrill of the acquisition. A new property, a new opportunity, a new adventure; there is a certain emotion in all that is tempting.
Having a diverse portfolio is also a good thing. It is well known that a variety of properties help mitigate risk, with that all-important safety net that keeps things moving forward, should there be an unexpected vacancy or setback. This is why the popular saying ‘don’t put eggs in the same basket’ makes so much sense applied to investment properties.
Real estate investors generally buy and hold their real estate investors, and do not have in mind to sell until they have obtained all the expected profitability of said properties.
But sometimes, they need to make changes to their portfolio and cut some investment properties, which have stopped being such a good investment, so as not to have losses. Or maybe selling properties was always part of his plan.
But where is that cut point? How do you know when enough is enough? Investing in real estate (for those who do not know what they are, it refers to the land, as well as any physical property or improvements placed on it, including gardens, houses, wells, etc. In turn, a property is a well that is attached to the ground in an inseparable way, physically and legally. Buildings and land are real estate.) It has to do with strategy, and having a good nose for knowing when to buy and when to sell, which are a crucial part of an effective strategy.
5 reasons why you should sell that investment property:
1- The original plan was always to sell.
A major mistake made by many real estate investors is failing to methodically and patiently develop a plan for how they want to invest in real estate. Impatience often leads to mistakes. The mistake, while it may seem otherwise, is never knowing if you are on the track, off the track or when to make adjustments.
Successful investors, no matter what measure is used, are investors who make a plan before they start investing and stick to that plan strictly. That includes selling ‘good’ assets that may be working as expected. Maybe the investor’s plan was to make certain moves on certain deadlines, and that may include holding properties forever and selling properties when everyone else thinks he’s crazy.
You can always change that plan at any time, but if you don’t make a plan from scratch, you have no strategy.
2-Consistently generates a negative cash flow.
There are scenarios where an investor must always make a change, whether it is part of their plan or not. This should be obvious, but it is not as easy as one might think.
Cash flow can vary from month to month as expenses fluctuate, making it unclear whether the property is proving to be a failure or you are in a difficult time period that will pass.
Consistent negative cash flow is the number one reason to sell an investment property: it does not generate income for the investor, so it is not worth maintaining.
If the property does not generate income and it is necessary to sell it, it is always good to enlist the help of a realtor to help you sell the property as quickly as possible.
3-Ownership is more problematic than it first appeared.
If the property is plagued with issues, they won’t stop, like foundation issues, mold, pest damage, bad neighborhoods, flooding, electrical issues, or other issues that may need constant attention. Above all, if we do not have the necessary resources to keep the investment property in perfect condition, such as, for example, it can happen when the investor is in another autonomous community or on the peninsula and the property is located in the Canary Islands.
Sometimes it is not worth worrying about and saves energy and not dedicate more resources than necessary.
If the numbers don’t make sense and are all headaches, what’s the point of keeping it?
4-It is better to invest elsewhere.
Diversification is good. However, there are situations where a choice will have to be made between the current market and new opportunities, whether due to limited resources or access to capital. Perhaps the current portfolio has allowed it to “level up” and now access a market, which months ago was out of reach, thanks to the equity that has been built.
Perhaps the economy is growing in a new market and not in the current one, and it is preferable to invest efforts in a place with clear opportunities. It’s about your personal strategy and deciding what you want to do with the investments.
5-Investment priorities have changed.
Over time, many real estate investors discover that they want to do something a little different. Many new investors, for example, start with a single property, usually a cheap one, and try to own it. This does not normally give them the returns they dreamed of, nor is it a great strategy, it is just ‘saving money’.
Or, on the other hand, maybe they went out and decided that that approach was not what they liked. And they want to be free again.
In either case, priorities and strategies change over time. You learn, improve, and change, and portfolios also change in the process. Sometimes that means rearranging the portfolio to reflect and meet new goals!
No matter the reason for the sale, the important thing is to make the decision when you know it is necessary.
And it is interesting to use the real estate agencies that will help sell the property in the shortest possible time, in addition to advising on the possible reforms that the property needs, or the ‘facelift’ that is necessary to carry out on the property, to sell it on time and not lose money with them.
If you want results, you must be proactive. If you know what you want for the financial future, you have to try to achieve it. Chase it. Albert Einstein already said it: ‘If what you are doing does not work, do something different’
