Selling Property During a Downturn
It’s quoted as the investor’s golden rule – never sell in a bearish market. But every once in a while every investor finds that they are holding a toxic piece of property, and selling property is the only way to keep if from causing you any more financial harm. Plus you have to keep moving forward with your life and if the only way to upgrade the family home or make the next move is by selling, then especially if you are buying and selling in the same market, you can come out on top.
If you find yourself in this situation you’ll have to face some tough realities – here are some tips to sell during a downturn.
Face the Situation
When markets take a dive, and an investment looks like it’s about to lose you a lot of money, you need to make sure you correctly assess the situation so you can make the best decision. This isn’t the time to get spooked and make a rash decision – on the contrary; it’s time to take a step back and try to get an honest assessment of what’s going on and what you need to remedy the situation.
Determine How Much of a Loss You Might Suffer if Selling Property
If you find yourself in a situation where you’ve already made an investment when the market takes a dive, you need to start running some numbers to figure out how much a poor investment can end up costing you. Can you afford the payments you will need to make on the property? If the answer is no, then you need to sell the property before a minor drain on your finances becomes a major one.
Predict your Cash Flows
Make sure you take into account all of the cash flows associated with the property. Do you have long-term tenants who will assist with your cash flow? If you don’t have tenants, will it be tough to secure a tenant in the current market? Is the rent going to cover the mortgage and other expenses? By understanding and predicting your cash flow, your income and expenses, you can work out whether you will need to sell now, or if you are able to hold on until the market recovers.