Advice on Selling Portfolio

Buying & Selling Real Estate

Advice on Selling Portfolio

Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes

I am currently liquidating my portfolio, which formerly held my rentals. I was able to package three of them in one deal, which ended up breaking even/not profitable (A little bummed on this one since I think the buyer (an investor) won the better side of the deal in terms of gaining equity on the houses). I have four more that I need to liquidate with a goal of having them all sold by the end of this year. They have been on the market for about three months now and I am working with my realtor to get them sold sooner.

The remaining properties have loans on them with one being free and clear and vacant, two being vacant with mortgages, and one is currently rented with a monthly mortgage payment due. I am trying to see if it makes financial and/or market sense to rehab them and possibly rent them out or just leave them as-is. I am leaning towards as-is due to the lack of funds in my current situation. Once sold, my goal is to have these mortgages paid off from the BRRRR method that I did and move on to different investing opportunities. At first, I wanted to just save it to build up enough investment funds to move to my next deal, but open to suggestions.

Any advice on steps to take to move in the right direction if you were in my position is greatly appreciated. Would like to hear from any investors that have been in this type of situation.

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Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes

1y

@Arron Paulino, its hard to give detailed advice, but here are a few thoughts:

1. How did you end up in this situation? It sounds like you started investing, but didn't follow all the way through. You have mortgaged properties sitting vacant and properties in need to rehab. So, it does not sound like to maximized the potential with what you already have.

2. Maybe you already own your next deal! Selling is expensive! Buying is expensive! Mortgage rates are higher than they were! So, a deal you have in your portfolio might be more lucrative when you consider those facts than something else you could buy right now!

So, I would start by analyzing properties I own as potential "deals". As I said in #1, it does not sound like they are maximized.

3. There is probably a reason why you feel you want to sell these. I suggest examining that carefully. Since these deals have not gone to plan for you so far, there should be a LOT you could learn from that experience.

See this reply in the discussion

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Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
1y
Hey Arron, looks like you got some great advice from some users on here. I am glad that you are aware of your situation and are cutting your losses before convincing yourself that the numbers "will" work eventually. As you have experienced this is the nature of these transactions. That being said I do want to leave you with a few pointers for your next deals so you don't run into same scenario

1. Don't invest out of state unless you KNOW the neighborhood. Many investors, especially those from NY and CA are pushed to invest out of state because their price points are way too expensive. This is a good reason to pursue RE out of state. But investing out of state is far riskier when not fully understanding the market. You must rely on people you don't know to tell you what works and what doesn't. this is why many fall into the trap of great "on paper" BRRRRs. We have a lot of these cruddy deals in philly. Sure you get your money out, but then you can't rent the darn thing or sell bc no one wants it at that inflated price, and you realize your tenant pool is doo doo

2. You're better off owning one solid househack in the long term than a bunch of these lower class deals. Just consider your own market. Looking at the history of the market, your appreciation will be 10x stronger in your market holding just 1 property than trying to manage 12 doors out of state. Having one solid 1.5M property is better than 7-12 cruddy 120k properties. You'll thank yourself in 10 years and will have all of your hair from not managing all of those units...

3. Think long term. Don't be concerned about appreication after 1 year. Where is this area going to be in 10, 15, or 20 years? Many people underestimate the power of a couple absolute solid PAID OFF Class A RE!
Sometimes its not about the quantity of RE, its about the quality of the RE- this applies in many parts of life

Good luck!
[email protected]267-767-0111
Alan Asriants - New Century Real Estate 590 Reviews
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
1y
Quote from @Arron Paulino:

Quote from @V.G Jason:

Investing in Memphis tells me almost everything I needed to know.
I don't blame you for selling. I push back against the dogmatic belief that because it didn't work for me this time, it's a failure. My recommendation would be consolidation not liquidation.
Tap out of Memphis, get your 80c on the dollar back if you can. Re-invest with more of a reserve in a better market, and understand you may not have the quantity or "doors" you are dreaming on your vision board. You'll have better quality assets, and more reserves. This level of confidence is derived from conviction and discipline, and that's how you invest. Not like a yo-yo.

I'm glad we're getting straight to the point. It's been a struggle.
I'm definitely not giving up on real estate investing and just need to clean house for a better result. Do you mind elaborating on the consolidation versus liquidation approach? I currently have the four properties in Memphis on the market and it's probably been about 3 months since they have been listed. Currently, I don't really have wiggle room in my budget to rehab these properties to hold better value on the market, have mortgages on 3/4 of them, and 1/4 is currently rented. Any advice?
Ditto on tapping out. Really just looking to take my L and do better on the next. Trying to get back to the level I was at when I first started my journey with a good chunk of savings and better reserves with the knowledge I have acquired to step into the right situations. For sure looking more for quality over quantity. This up-and-down journey takes a lot of grit.

Consolidation versus liquidation, as in consolidate the portfolio rather than fully liquidate from RE. Sell these 4 properties, go buy 2-3 significantly better one's with better reserves and really extract the value from REI by buying distressed & fixing up, and holding.
These aren't set it and forget it type investments. As much "passive" income is pushed here, or turnkey, etc., these are active investments for one for two these are physical assets. They require significant more work than people account for.
The first 1-5 years this will yo-yo, so be over equipped for it. Buying distressed & fixing yourself gives you the full intel on the quality of your product, buying 2 rather than 4 you can pay for better locations, then having reserves gives you a healthy peace of mind.
0 Reply
Arron Paulino
OP
Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes
1y
Quote from @Alan Asriants:

Hey Arron, looks like you got some great advice from some users on here. I am glad that you are aware of your situation and are cutting your losses before convincing yourself that the numbers "will" work eventually. As you have experienced this is the nature of these transactions. That being said I do want to leave you with a few pointers for your next deals so you don't run into same scenario

1. Don't invest out of state unless you KNOW the neighborhood. Many investors, especially those from NY and CA are pushed to invest out of state because their price points are way too expensive. This is a good reason to pursue RE out of state. But investing out of state is far riskier when not fully understanding the market. You must rely on people you don't know to tell you what works and what doesn't. this is why many fall into the trap of great "on paper" BRRRRs. We have a lot of these cruddy deals in philly. Sure you get your money out, but then you can't rent the darn thing or sell bc no one wants it at that inflated price, and you realize your tenant pool is doo doo

2. You're better off owning one solid househack in the long term than a bunch of these lower class deals. Just consider your own market. Looking at the history of the market, your appreciation will be 10x stronger in your market holding just 1 property than trying to manage 12 doors out of state. Having one solid 1.5M property is better than 7-12 cruddy 120k properties. You'll thank yourself in 10 years and will have all of your hair from not managing all of those units...

3. Think long term. Don't be concerned about appreication after 1 year. Where is this area going to be in 10, 15, or 20 years? Many people underestimate the power of a couple absolute solid PAID OFF Class A RE!
Sometimes its not about the quantity of RE, its about the quality of the RE- this applies in many parts of life

Good luck!

Hey Alan, thanks for the response! Yes, I am really getting value out of the input from the community and learning to cut my losses and move on. The numbers only looked good initially and really led to headaches in actuality.
It really was hard to step out of my tunnel vision when I was over the moon when I heard of the profit I could make rather than looking at my own market with my initial funds.
I agree that one or two solid investments outweigh many cruddy properties just to show that I have so many under my belt.
Quality over quantity is the motto going forward for sure.
1 Reply
Arron Paulino
OP
Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes
1y
Quote from @V.G Jason:

Quote from @Arron Paulino:

Quote from @V.G Jason:

Investing in Memphis tells me almost everything I needed to know.
I don't blame you for selling. I push back against the dogmatic belief that because it didn't work for me this time, it's a failure. My recommendation would be consolidation not liquidation.
Tap out of Memphis, get your 80c on the dollar back if you can. Re-invest with more of a reserve in a better market, and understand you may not have the quantity or "doors" you are dreaming on your vision board. You'll have better quality assets, and more reserves. This level of confidence is derived from conviction and discipline, and that's how you invest. Not like a yo-yo.

I'm glad we're getting straight to the point. It's been a struggle.
I'm definitely not giving up on real estate investing and just need to clean house for a better result. Do you mind elaborating on the consolidation versus liquidation approach? I currently have the four properties in Memphis on the market and it's probably been about 3 months since they have been listed. Currently, I don't really have wiggle room in my budget to rehab these properties to hold better value on the market, have mortgages on 3/4 of them, and 1/4 is currently rented. Any advice?
Ditto on tapping out. Really just looking to take my L and do better on the next. Trying to get back to the level I was at when I first started my journey with a good chunk of savings and better reserves with the knowledge I have acquired to step into the right situations. For sure looking more for quality over quantity. This up-and-down journey takes a lot of grit.

Consolidation versus liquidation, as in consolidate the portfolio rather than fully liquidate from RE. Sell these 4 properties, go buy 2-3 significantly better one's with better reserves and really extract the value from REI by buying distressed & fixing up, and holding.
These aren't set it and forget it type investments. As much "passive" income is pushed here, or turnkey, etc., these are active investments for one for two these are physical assets. They require significant more work than people account for.
The first 1-5 years this will yo-yo, so be over equipped for it. Buying distressed & fixing yourself gives you the full intel on the quality of your product, buying 2 rather than 4 you can pay for better locations, then having reserves gives you a healthy peace of mind.

I do plan on selling these properties to dive into better investments to restart my investment journey and strengthen my reserves.
I do agree. I've really had to manage my property manager as an example and ensure that I am really getting the return forecasted for my investments.
Peace of mind is the goal at the end of the day. I look forward to more quality investments and not having a rapid fire mindset that led to a spiral downwards going forward.
0 Reply
Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
1y
Quote from @Arron Paulino:

Quote from @Alan Asriants:

Hey Arron, looks like you got some great advice from some users on here. I am glad that you are aware of your situation and are cutting your losses before convincing yourself that the numbers "will" work eventually. As you have experienced this is the nature of these transactions. That being said I do want to leave you with a few pointers for your next deals so you don't run into same scenario

1. Don't invest out of state unless you KNOW the neighborhood. Many investors, especially those from NY and CA are pushed to invest out of state because their price points are way too expensive. This is a good reason to pursue RE out of state. But investing out of state is far riskier when not fully understanding the market. You must rely on people you don't know to tell you what works and what doesn't. this is why many fall into the trap of great "on paper" BRRRRs. We have a lot of these cruddy deals in philly. Sure you get your money out, but then you can't rent the darn thing or sell bc no one wants it at that inflated price, and you realize your tenant pool is doo doo

2. You're better off owning one solid househack in the long term than a bunch of these lower class deals. Just consider your own market. Looking at the history of the market, your appreciation will be 10x stronger in your market holding just 1 property than trying to manage 12 doors out of state. Having one solid 1.5M property is better than 7-12 cruddy 120k properties. You'll thank yourself in 10 years and will have all of your hair from not managing all of those units...

3. Think long term. Don't be concerned about appreication after 1 year. Where is this area going to be in 10, 15, or 20 years? Many people underestimate the power of a couple absolute solid PAID OFF Class A RE!
Sometimes its not about the quantity of RE, its about the quality of the RE- this applies in many parts of life

Good luck!

Hey Alan, thanks for the response! Yes, I am really getting value out of the input from the community and learning to cut my losses and move on. The numbers only looked good initially and really led to headaches in actuality.
It really was hard to step out of my tunnel vision when I was over the moon when I heard of the profit I could make rather than looking at my own market with my initial funds.
I agree that one or two solid investments outweigh many cruddy properties just to show that I have so many under my belt.
Quality over quantity is the motto going forward for sure.

Nice man, love the attitude!
[email protected]267-767-0111
Alan Asriants - New Century Real Estate 590 Reviews
View Page
1 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
1y
Quote from @Arron Paulino:

Quote from @V.G Jason:

Quote from @Arron Paulino:

Quote from @V.G Jason:

Investing in Memphis tells me almost everything I needed to know.
I don't blame you for selling. I push back against the dogmatic belief that because it didn't work for me this time, it's a failure. My recommendation would be consolidation not liquidation.
Tap out of Memphis, get your 80c on the dollar back if you can. Re-invest with more of a reserve in a better market, and understand you may not have the quantity or "doors" you are dreaming on your vision board. You'll have better quality assets, and more reserves. This level of confidence is derived from conviction and discipline, and that's how you invest. Not like a yo-yo.

I'm glad we're getting straight to the point. It's been a struggle.
I'm definitely not giving up on real estate investing and just need to clean house for a better result. Do you mind elaborating on the consolidation versus liquidation approach? I currently have the four properties in Memphis on the market and it's probably been about 3 months since they have been listed. Currently, I don't really have wiggle room in my budget to rehab these properties to hold better value on the market, have mortgages on 3/4 of them, and 1/4 is currently rented. Any advice?
Ditto on tapping out. Really just looking to take my L and do better on the next. Trying to get back to the level I was at when I first started my journey with a good chunk of savings and better reserves with the knowledge I have acquired to step into the right situations. For sure looking more for quality over quantity. This up-and-down journey takes a lot of grit.

Consolidation versus liquidation, as in consolidate the portfolio rather than fully liquidate from RE. Sell these 4 properties, go buy 2-3 significantly better one's with better reserves and really extract the value from REI by buying distressed & fixing up, and holding.
These aren't set it and forget it type investments. As much "passive" income is pushed here, or turnkey, etc., these are active investments for one for two these are physical assets. They require significant more work than people account for.
The first 1-5 years this will yo-yo, so be over equipped for it. Buying distressed & fixing yourself gives you the full intel on the quality of your product, buying 2 rather than 4 you can pay for better locations, then having reserves gives you a healthy peace of mind.

I do plan on selling these properties to dive into better investments to restart my investment journey and strengthen my reserves.
I do agree. I've really had to manage my property manager as an example and ensure that I am really getting the return forecasted for my investments.
Peace of mind is the goal at the end of the day. I look forward to more quality investments and not having a rapid fire mindset that led to a spiral downwards going forward.

Stick to that and you'll be just fine. Go at your own pace.
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