Does it ever make sense to sell at a loss.

Does it ever make sense to sell at a loss.

Member since 2023 · 23 posts · 15 votes

Does it make sense to get money out of a poor performing investment to enter into a better performing investment if the sale results in a loss? 

I have a duplex with $70k invested into it OH. Way too much money put in repairs. The property was supposed to be for cash flow and the neighborhood doesn’t appreciate. Cash flow is $390/mo or 6.6% return. With the way interest rates are and the rural neighborhood it’s located at, I think it will be difficult to sell and get all my money back. 

I might only get $50k out of my $70k investment. 

I have an investment group I work with that does successful flips with 20% return over 3-4months. 

If I do one flip with $50k added to my fund for flipping I could make 20% on that $50k. I would make $10k. This is more than the $390/mo I’m making in the original $70k. 

However adding the $10k profit to $50k puts me at $60k. I still need to do one more flip over 4 months to get back to the $70k I had. 

The duplex I own with $70k invested seems like every month there's a new big repair and it's an old property. This is why I want out. I was originally supposed to have a 10%-12% ROI but now it's 6.6% because I keep having to put more money. And I can only sell it for so much because it depends on the rents. So everytime I put more money into it I think that I won't be able to get it back in the event that I sell. Makes me think it's better to get out now. I have a mortgage at 9% DSCR too.

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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
2y

@Alfath Ahmed you can stop copying/pasting these chamber of commerce stats about Columbus. We've all seen them 1000 times. It's not a boom town. It's fine. It's a growing midwestern city. Intel is a company whose stock is down 16.5% over the last 4 years while the S&P is up 65%. Google, Amazon, and Meta are investing all over the US. Cool.

You can cherry pick stats about any city. I'll take a swing at my market. Houston metro is the 27th largest economy in the world (just behind Belgium and ahead of Nigeria, in case you were wondering), has more small business job growth than any other city in the US, and since I moved here 13 years ago has grown by 1.7M people in the metro area. I don't know how big Columbus is, but common sense suggests that Houston has added the approximate population of greater Columbus in 13 years. Awesome. Who cares? Nobody is asking. People want to know how to underwrite their first deal or how to go about avoiding common mistakes. They can do a google search for stats and facts.

Stop selling, stop acting like everything is easier than it actually is, and do the blocking and tackling of helping green and naïve investors. I really am happy for your success. I'm not being condescending or patronizing. And the entire weight of this issue does not fall on you. I don't know a thing about you, but even you have to admit, there are a bunch of Ohio lurkers on here that seem more interested in grabbing their next commission check than actually helping people figure out how to navigate and succeed in today's market.

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  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Mike Boss Sometimes your first few deals are more learning experiences than money making opportunities.

    I’d sell but would be a little wary of the 20% return on a flipping investment strategy. However you never know unless you try.

    I took a chance on a crypto investment about 5 months ago. It too had a guaranteed return. I personally know the person who got me into it and is handling the investment and have been very good friends with her and her family for over 20 years. For the entire 5 months there have been half truths and misinformation and misunderstandings on my part. I’m less than 3 days away from getting my investment money and promised return back now.

    Sometimes you just never know about these things until you try them out. Buyer beware. Do your research thoroughly. Personally I’d recommend buying your own property.

  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    2y

    What you paid for a property is 'sunk information'

    You sell the property if you don't think the property will perform to your expectations and you think your money can be used better elsewhere.

  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    2y
    Quote from @Travis Timmons:

    @Alfath Ahmed you can stop copying/pasting these chamber of commerce stats about Columbus. We've all seen them 1000 times. It's not a boom town. It's fine. It's a growing midwestern city. Intel is a company whose stock is down 16.5% over the last 4 years while the S&P is up 65%. Google, Amazon, and Meta are investing all over the US. Cool.

    You can cherry pick stats about any city. I'll take a swing at my market. Houston metro is the 27th largest economy in the world (just behind Belgium and ahead of Nigeria, in case you were wondering), has more small business job growth than any other city in the US, and since I moved here 13 years ago has grown by 1.7M people in the metro area. I don't know how big Columbus is, but common sense suggests that Houston has added the approximate population of greater Columbus in 13 years. Awesome. Who cares? Nobody is asking. People want to know how to underwrite their first deal or how to go about avoiding common mistakes. They can do a google search for stats and facts.

    Stop selling, stop acting like everything is easier than it actually is, and do the blocking and tackling of helping green and naïve investors. I really am happy for your success. I'm not being condescending or patronizing. And the entire weight of this issue does not fall on you. I don't know a thing about you, but even you have to admit, there are a bunch of Ohio lurkers on here that seem more interested in grabbing their next commission check than actually helping people figure out how to navigate and succeed in today's market.


     6 upvotes lol

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    Well if the property value/market is declining, better to sell early rather than later. 

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