I speak with investors nearly weekly, and have clients, some currently active, who own income properties where Murphy has settled in. Think Florida — Vegas — two or three states in the Midwest. As a matter of fact, there are folks in my own Golden State of California who’re havin’ serious problems as they do their level best to Get Out Dodge.
Though there are many solid things you can do to enhance the likelihood of sellin’ your properties in loser locations, the one that works virtually every time it’s tried is pricing. As in LOW pricing. Sure, new paint, carpet, sprucin’ up the yards, and makin’ sure everything works well greases the wheels, but if the price doesn’t wow ‘em, they’re on to the next batch of 10 before you can say, but . . . but . . . wait . . .
Assuming your end game is to take whatever net equity you salvage to a better suited, more dynamic market, financing a sale yourself defeats that purpose by definition. Allow me to construct a scenario based upon recent experience and calls.
Imagine you’re stuck in two states
We’ll set up the scenario today, then suggest a solution(s) in the following post.
Our investors owns a few props in one state, and a lone property in his home state. Both areas have been hit hard, for former far more than the latter. Problem is twofold.
1. Both markets aren’t seller friendly. Duh.
2. Prices continue their southward trek in both states, which means the net equity seems to be shrinking measurably almost by the clock’s minute hand.
Their total equity in the game for all rentals combined was roughly $3-400,000 a few years ago. Now? try $170,000 if the stars line up in his favor. In fact, one of the rentals would require him to bring $15-20,000 to the table in order to close. Not appetizing, is it?
The most important question.
If they all sold tomorrow in what, and where should the investor invest the pitifully small ransomed capital?
The bonus question would be crucial: Is the move itself a slam dunk no-brainer?
If that last question can’t be answered both quickly and enthusiastically, YES!! — then don’t make the move. Tomorrow will look at how this investor can indeed rise from the ashes of a plan gone horribly wrong.
If you’re thinkin’ this post was written directly to you, what’re ya waitin’ for? Call me — 619 889-7100 will get me. Or just send me a note by clickin’ on the Contact BawldGuy button up top. Have a good one.
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Some folks may have a different approach to your second question. Their thinking may be take a calculated risk and that their is “no time but the present”. How would you respond to that individual or individuals?
Hey Drew — To each their own, but relegating a decision with hard earned capital to ‘no time but he present’ isn’t calculated at all. Even if it is calculated, the return better be freakin’ impressive. In real estate, long or short term, the concept of never movin’ unless it’s a slam dunk no-brainer remains my M.O.
On the other hand, it’s their capital. Those investors employing the live for today, calculated risk approach consistently remind me of my uncle’s saying, which is taught to all rookie pilots. (He was a fighter pilot in two wars.)
“There are old pilots, and there are bold pilots. But there are NO old, bold pilots.”