The BIGG Successs Show
My Rental Property is Costing Me Money. What Should I Do?
How to know if you should continue renting out your property or sell it. Read our show summary at biggsuccess.com.
Welcome to The Big Success Show. Today, we'll talk about how to know if you should continue renting out your property or sell it. "The Big Success Show with George and Mary Lynn" Jeff sent us his big challenge. He owns a rental property. Now, about six months ago, his job took him several states away from where this property is located. He bought this property, he invested a bunch of money to fix it up. Now, just two years into the investment, his tenant's moving out and the place is a mess. Looks like he's going to have to invest a bunch of money again just to make it rentable. He thought Mary Lynn that investing in real estate was a great way to make money. He says it feels like all he's doing is spending it. So frustrating. But at the same time, he feels like he can't afford to not rent it out again because he's got so much tied up in it, right? And he's worried about selling it now because of everything he hears about the real estate market. So Jeff, once our advice, Mary Lynn. What a quandary. And you know, sometimes bad things happen to good landlords. A real estate is a good way to build your wealth, but it can also drain your wealth. I heard a real estate guy the other day who had what I thought was a great quote. He said, "Find a landlord who lives more than 20 minutes from his rental property and you'll find a landlord who's probably ready to sell." Unless you're one of the big guys, it usually pays to be close to your investments. And I think that's good advice, Mary Lynn, and something I think a lot of people forget. Real estate is a business even if you only own one property. But obviously Jeff is treating it as a business. He had a signed lease. You know, it just seems to be in this particular business. There's a little recourse for the landlord to get screwed over by the tenant. Well, there is recourse, Mary Lynn. Of course, you know the old saying you can't get blood from a turnip, right? But you can go after the tenant who's caused a lot of damage more than the typical wear and tear. Yeah, but now you're talking about court costs. Lord knows how long it'll take you to get that money. And, you know, he is several states away. Yeah, but he wouldn't have to be there if it went to court. He could get his attorney to represent him. And odds are he could find an attorney who would even take this on a contingency. Well, George, you've owned rental property. What do you think Jeff should do? Sell. It's that simple. All right. Why do you say that? Well, a couple thoughts. First of all, Jeff, you said you're worried about selling because the real estate markets down. Obviously, that's what we hear in the news these days. But once again, real estate is a very local business. I just heard about two properties that sold for the full asking price, one within eight hours of being listed and the other within an hour. Well, those are fantastic stories, George, but I have a friend who has a wonderful home that's been on the market for, geez, I'd say over a year. So I think it's all about location. Well, actually, Marilyn, I think it's whether they're your friend or mine. My friends can help sell their houses fast and your friends seem to take a little forever. Oh, whatever. Well, yeah, I think the point is until you list your property, you're really not going to know. You can talk to realtors, ask around, and you can probably get an educated guess about how fast it will sell. But here's the point I would make. Isn't it better to fix it up and let it sit empty than to fix it up just to fix it up again after your next tenant moves out? Yeah, but George, every landlord risks having to do this, even if they live next door. So why are you so adamant about Jeff selling? Distance. Pure and simple, one word distance. You know, Jeff is just too far away. And if he were in the area, he can keep an eye on the property. The only way I'd recommend that he keep renting it is if he hires an experienced local property manager to handle leasing and the maintenance. So what you're saying is you can't have a long distance love affair with your property, with your rental property. Okay. Coming up, something we can learn from Jeff's situation that applies to all business and investment decisions. Today, we're answering a big challenge from Jeff and he has a rental property that's costing him money rather than making him money. It's not supposed to go that way. It's not. And in Jeff's situation, there's a lesson we can all learn about when to cut your losses. Picture a ship that sunk. You sunk my battleship. It was my big one. Now you can invest money to try and make that ship float again or you could just leave it on the bottom of the ocean and get a different ship. So I think it's pretty obvious which of those two options is the best. Well, Marilyn, I will say from personal experience, I think it's obvious until you're the one in the middle of it all. So your money's in one second. That's exactly right. Because I will tell you that when you're there, it's not that easy. And the point is you just have to look at your situation and realize that just like the sunk ship, the money you've already invested is a sunk cost. So don't base your decision today on money that's already been spent. Base it on what you'll have to invest now and in the future and what's going to give you the best return. Keep what you got and plant more money into it or just move on to something else. Well, Jeff, we hope this helps you out with your big decision and thanks so much for sharing your big challenge with us. You'll find a written summary of today's show on our blog at Big Success that's big with 2gsuccess.com. Next time, we'll talk about three questions to ask yourself before scheduling your next vacation. And until then, here's to your big success. [MUSIC]