Grin and Bear It or Sell?

Question

I'm sure some of you have been in this position before... I bought a 10-unit building a year ago. I bought it for the cash flow, not appreciation, and I knew getting into it there was certain work I'd need to do, but I'm also finding out about other work that predates my ownership that wasn't done right that I'm going to have to address. Additionally, I'm in the process of going through an insurance claim which is stressful. If you were in this situation, would you hang on to the property to recoup the money spent on work or sell and move on to something else?

Basically, I'm curious to hear other people's experiences in dealing with properties where it turned out to be more than what they were expecting to take on. Thanks!

Elizabeth Bain · Answer

Thank you both! I appreciate the perspectives. This has definitely been a learning experience. I will prioritize location over cash flow next time! Just looking forward to seeing the light at the end of the tunnel.

Nathan Gesner · Answer

It's hard to say without knowing the details of the situation.

I always recommend setting extra money aside because there are always problems the first 6-12 months of ownership that will cost more than you anticipated. The good news is that you'll recover it.

Jill F. · Answer

I've done both. I am finishing up renovations on a 'mistake' property purchase in 2018. It's been a long haul and I'll never buy something in this poor condition again. And Last year we sold one property that was cash flow only because we are no longer investing in areas where appreciation is unlikely and where the neighborhood rents won't support the improvements required to bring the building up to our standards. We also sold our worse condition duplex property to some flippers; it was in a better neighborhood, but it was a bigger job than we really want to tackle. Moving forward we plan to focus on larger buy and hold properties. I knew for sure we made the right decision when we had a deal fall through on the duplex and I was very disappointed and then again when I was massively relieved when we closed on the deals.