3 Reasons Why Real Estate Investors Hold Onto Underperforming Properties
Real estate investors often become emotionally attached to their properties, leading them to hold onto poor investments. However, retaining underperforming assets can significantly hinder returns. Here are the top 3 reasons investors tend to keep unprofitable properties and tips for objectively evaluating your holdings.
1. Emotional Attachment.
Becoming attached to a property is understandable, but can lead to distorted thinking. Viewing a beloved childhood home as just another investment asset allows for clear-eyed analysis. And an objective assessment may reveal the property is actually losing you money each month and year. Selling or exchanging it could significantly boost your overall returns. Overcoming emotional barriers leads to rational choices.
2. Exiting seems difficult and options unclear.
While intimidating, exiting a property through sale or exchange simply requires tapping experts to guide you. Realtors handle marketing and sales, while 1031 intermediaries navigate the exchange process. And they open your eyes to options you may not have considered, like multifamily properties or Delaware funds with enticing upside. Don’t let process inertia cost you the chance to pursue more profitable assets aligned with your investing goals.
3. True performance isn’t always obvious.
If you only look at appreciation or cash flow, you may think an asset is performing better than it actually is. In other words, just because your property has positive cash flow or has appreciated substantially, it doesn’t mean it is performing well. With professional assistance, you can analyze your properties holistically, incorporating tax optimization, basis, and total return. This full picture may reveal some holdings are dramatically underperforming. Accurately assessing properties lets you exchange laggards for new assets that can significantly boost your portfolio’s bottom line.
Getting past emotional barriers, process hurdles, and evaluation challenges unlocks opportunities to exit underperformers and pursue better investments. Don’t leave returns on the table due to attachment, inertia, or opaque analysis – clear obstacles for financial gain.
About SIFF
SIFF Investment Services provides unbiased, fee-based real estate consulting to disrupt outdated real estate models. By supplying clients with objective, unbiased information, we shift the power to the real estate investor to make informed decisions. We are not realtors or agents. Our role is to educate and empower clients by objectively outlining all options. Our fee-only structure allows us to put client interests first. By taking an unbiased, consultative approach, SIFF aims to help clients prosper through wise real estate investments.
Call Us Today: 1 (415) 601-1051 | info@siffinvestment.com
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