HOLD or SELL

[carcoa]

I have a property that is older and is not producing any positive cash flow. I will likely have to put some money into it in the near future. I have a very good renter but she is on a limited budget so rental increase is not an option for her. I approached her about selling it and she was devastated. She accused me of playing dirty pool and that I was only thinking of it as an asset, and how could I kick out an old lady on disability from "her home"? Now I feel so guilty, I don't know what to do? I have been told never to sell, then when I couldn't get another mortgage to buy another property I was told to dump it. Hoping to hear from some experienced real estate investors, what would you do in this case?



I appreciate your feed back, if nothing else, to make me feel like less of a smuck!!

 

[cagoodrow]

If the property is performing, then you need to sell it. As hard as it is, look at this as your business - you have do what is best for the business.



If you do decide to sell, perhaps line up a tenant placement service for her to help ease the transition.

 

[kfort]

This is a business decision based off numbers. End of story. That doesn't mean you can't help your tenant find a new place. If she lives 30 more years are you willing to lose money the whole time as a benevolent gesture? Sell / renovate/ hold / demolish, all determined by goals and property specific numbers and factors.

 

[Rickson9]

Sell.



Next time you could try to buy at a better price so that you can cash flow, provide affordable housing, and hopefully minimize the chance of such an unfortunate situation happening again.

 

[3canctheayr]

The tenant is manipulating you.(or you're letting her manipulate you)



She is out of line by what she said. It is an asset, pure and simple. It's her home, but she is only renting the use of that asset and her rent needs to cover all of the true costs, plus some extra. If she can't afford that, she needs to reconsider her budget and living quarters.

It's your job to maintain the unit and her job to keep it clean, not damage things and pay the rent on time. That's all your beholden to. If you choose to sell, that's your prerogative and none of her business. If the buyer wants to keep her, fine. If not she'll have to move.



If your in Ontario, it will be hard to raise her rent by much, or get her out, unless the buyer wants the space for themselves or family.

 

[Sherilynn]

I wholeheartedly agree with the other advice.



The "never sell" rule only applies to property that performs. For property that doesn't perform, you must either dump it or change something to make it work.



For example, I had a condo that was barely breaking even but I would have lost a substantial amount of money if I sold during the recession. So I transformed the property into a short-term, fully equipped rental and now it is one of my best performing properties.



In other cases, it may make more sense to take the loss and dump the property so that you can reinvest the funds in a property that works for you.

 

[Alvaro Sanchez]

It's hard to provide advice when not all the details are available but as other suggested the easier option when a property is not performing is to sell it to minimize losses. However, I find that there are always options in cases like this, please give me a call to discuss and perhaps come with some options that works for you and your tenant.

 

[invst4profit]

It's easy to provide advice with all the details that are available.



1. You are asking if you should sell therefor you appear to want to sell.

2. You are not a social worker and should not care where your tenant lives.

3. If making money is not your number one priority you should not be in business.

4. You are not cut out for this business if you base your rents on your tenants income level.

5. You might consider a career change to social work.



SELL and consider investing in something other that rental properties.

 

[carcoa]

Thank you everyone for your advice. I knew the answer, I just needed to hear it. I really appreciate your comments. It's going up for sale!

 

[Kevintperry]

As difficult as it was, I think you definitely made the right decision. You can't keep the status quo and expect different results...people call that the definition of insanity! Chalk it up as an experience builder, as I bet you'll never be putting yourself in this situation again.

 

[Tibo]

Is this a good location. I would hate for you to lose your property. Can you use it as a student rental. Maby call a property manager and see if they can be creative for you. If you do renos and then apply for an increase above the guide line. Can you do a rent to own... Thus evicting the tenant because the new owners want in. Dont give up until you have tried all possibilities. This is not the only place for advice contact a realtor that is known and specilizes in your type of situation.



Good luck

 

[Thomas Beyer]

Never sell unless you have to as prices in 5, 10 or 20 years will be higher. So look at options like increased rent, lowering expenses, second income from add'l suite or furnished, re-finance to get $s out ..



But sometimes the #s just don't make sense or the location is bad or the vacancies and associated expenses make cash-flow difficult or perpetually negative, then yes, get out and move on.