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How I Know When It’s Time To Get Out of Real Estate

by Tracy Royce on August 15, 2013 · 19 comments

Exit Strategy

With the shift in the real estate tide coming in, hordes are flocking to invest, buy, and venture into the world of speculation.

However, for anyone that’s been in real estate the last 5 years, there’s certainly been times where I’m sure the thought has crept in…”should I get out of this business, at least for awhile?” The difficulty in financing, the fallout of pricing, and general malaise towards the industry deterred most from considering real estate as a profession.

Now with prices rising once again, there still is a undertow of confusion towards purchasing. Are prices going far too high? Are profit margins all but gone? Will all the competition make my marketing efforts meaningless?

But, this blog post actually isn’t going to focus just on the economics of when to get out of real estate; rather, when’s a good time for YOU to get out of the business.

#1) The Thrill is Gone

When the excitement has left, apathy sets in, and bad decisions get made. Or, not much gets done at all. Which will feed into the self-fulfilling prophecy that real estate isn’t profitable and is a waste of time.

Given, anyone that’s spend a lot of time in a high-stress high-stakes career tends to wane in their enthusiasm from time to time. After all, no pain no gain right?

But, at some point you’ve hopefully reached your financial goals, can retire a multimillionaire, and either hire out staff to take over the tasks that drive you insane, or retire altogether.

But, if you are starting to disdain what you do, have given it a go, and it’s simply not for you anymore, it’s a good time to bow out.

#2) The Bottom is Dropping Out

During the downturn, much of the concern from the investors standpoint (both those who were holding property and buying property) was, when’s the fallout going to end? Timing markets is a mix of science, behavioral economics, and art. But, if clairvoyance isn’t your specialty, sitting on the sidelines may be a more sound approach then being on the playing field and trying to play rugby blind.

Again, much of this is prefaced on where you are at financially. I’m hearing just as many investors saying “Prices are too crazy, I’m selling everything” now as I did in 2008. But, I can’t judge, because it all depends on when they bought, how they bought, how much they paid, their goals, cash flow, and predictions.

But, during a time of much volatility, it’s crucial to determine your exit strategies if you’re still going to play the game. If you’re still new and don’t feel comfortable navigating the rapids alone (don’t you just love these vivid analogies!), then it’s probably better to let the dust settle and tip toe back in.

When is it GOOD to get into Real Estate?

Now the evangelical in me comes out to profess, “Honey, it’s AL-ways a good time to get into real estate!”. This could be, however, working in a position that correlates with the industry, perhaps not directly in sales or acquisitions though.

If you understand where the market is and how to profit, buying and selling or buying to hold may come as second nature. It may not be in your own backyard, and heck, it may be while others are begrudging the entire asset class. But, depending on your foresight, financial ability, and risk tolerance, people will always need a place to live, and there will always be a way to capitalize from filling a demand.

I’m a big proponent of working IN the industry before you go it alone as a real estate investor. After all, why not get paid to learn? This also gives you the opportunity to see if you truly enjoy this business, find your niche and make connections.

But, coming from someone who survived the storm in one of the hardest hit areas of the nation during the foreclosure crisis (who came out alive and ahead), I can fully attest to two things:

  1. Don’t always listen to the hype. Dig deep to get the facts, link up with winners, and let the naysayers talk while you forage forward.
  2. Be smart. Know when to say “when”, make strategic moves, and be open to change.

What do you think?

When’s do you think it’s time to get out of real estate? What about the best time to get in?

If you like this topic, let’s keep the conversation going…..please share this on Twitter, G+, and Facebook. Thanks a million!

Photo: Almond Dhukka

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{ 19 comments… read them below or add one }

Jim Pratt August 15, 2013 at 1:56 pm

I love Real Estate, especially if renters weren’t involve. Been working on how to retire from it and go into other investments for years. There is nothing that can produce anywhere close to the returns that I get with the same guarantees. My orchard keeps producing regardless of how the stock market is doing.
Best time to get in as Jeff would say “4:30 yesterday”, best time to get out: can’t answer that one!
For me- hired PMs and cut way back on my work load, 2/3 retirement:)


Tracy Royce August 15, 2013 at 3:16 pm

Sounds like you’re playing the game right, Jim! You can still be in real estate without pounding the pavement. Thanks for sharing.


Jeff S August 15, 2013 at 2:42 pm

If you can’t pay your bills then the universe is talking to you. Been there. Being in RE is a choice now, not because I need to earn bill money. It is much more fun that way.


Tracy Royce August 15, 2013 at 3:17 pm

Couple big checks can be game changers, Jeff. Glad you stuck with it and can make decisions based on desire, not just need. To your success!


Karen Rittenhouse August 15, 2013 at 3:45 pm

What? There’s a time to get out? Why would anyone want to get out of real estate?

When to get in? Yesterday! Don’t wait to buy real estate – buy real estate and wait!

Thanks, Tracy.


kris patel August 15, 2013 at 7:00 pm

I am for long haul, stay in it for ever!!!
But had ti sell my Blockbuster Video, since brick and mortar will not be needed, due to Netflix etc, So made a great decision, before their bankrupcy.
Also, some of my TIC investments with 25-27 owners, need to be in 1031 exchange, when they sell the property. So timing is not known, may be 5 yrs, 10 yrs or never.
Get in, if you can get in with say 30-40 % discount, and has great cash flow to enjoy.


kris patel August 16, 2013 at 8:09 am

Above is in retirement. During early days, time to sell was when I can double or triple my equity, and move to bigger and better investment. Say initial 100k dn, sell when equity is 300k, and one more time, before you can buy triple net property, zero headache!!!!!


Derek August 15, 2013 at 7:50 pm

The answer is NEVER;)


Jeff Brown August 15, 2013 at 9:36 pm

Get 10 investors in a room and it’s even money you’ll get 11 answers to these questions. The more experience I get the more I remember Dad’s and the other mentors’ advice to me. They told me that experience is almost always underrated and undervalued. Boy, have I seen proof of that over the last decade or so.


Nick August 16, 2013 at 8:26 am

A guy in my local REIA last night told a story I never heard before and was perfect for this!

He was talking about the eldest Kennedy (I can’t remember his name but it was the one who first started making the family fortune.) He said in 1929 he was getting his shoes shined in NYC when the young kid shining his shoes started telling him advice on how to make money in the stock market. He said a light bulb went off when he heard this and he sold all of his paper assets right after this. This just happened to be right before the massive crash.

Years later, he still had his fortune and then put it into real estate and grew the family fortune.

His point was, when every Joe on the street is talking about this asset class or that market is the best to be in….the train has passed and is getting ready to crash.


Tracy Royce August 23, 2013 at 11:37 am

I’ve heard that one before to, and it’s entirely true. Thanks for sharing!


Matt August 16, 2013 at 11:03 am

That is Joe Kennedy Sr., who also became the first SEC Chairman and was the father of John, Bobby, and Ted.


Valerie August 19, 2013 at 12:01 am

Thanks for the post Tracy. Haven’t gotten into the fray yet and you brought out a point I have seriously been considering and that is to work in the industry before I go it alone and purchase, but then the other voice says, if you’re going to do it, do it. I just have to wait and see when an opportunity presents itself. Until then I’ll just keep reading BiggerPockets.


Tracy Royce August 23, 2013 at 11:39 am

Nothing creates opportunity like action. Depending on what area you are in Valerie, it could be very competitive, as well. Do keep going and persisting!


Shaun August 22, 2013 at 11:22 am

I’m with the majority with the best time to get in was yesterday and the time to get out is never.

That being said it makes sense to adapt to what the market is telling you.
If I was in a market that has run up recently I’d be wholesaling or rehabbing to catch the high prices and not killing myself trying to get cash flow on overpriced property.
If I had a portfolio of rentals in the area the I got in the crash years I’d have the luxury of trying to cash out or continue to hold with what is probably nearly unattainable returns now.
Now take the cash and invest in a more stable cash flow area or hold it until the next bubble burst.


Tracy Royce August 23, 2013 at 11:39 am

Wonderfully stated. Class, listen to what Shaun said. :)


Jeff Brown August 23, 2013 at 11:42 am

Love it, Shaun.


Shaun August 23, 2013 at 3:33 pm

Thank you Tracy Angeles Jeff.
Feels good to get validation by some of the heavy hitters on here!

Shaun August 23, 2013 at 3:46 pm

What the heck auto correct and to Angeles???

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