Hi Friend,
I hope you are doing well.
I have been helping people buy their first rental property for many years now.
During these years I must say, I have seen it all.
I have witnessed people buy multiple properties at once, become extremely successful at investing in real estate and never look back.
On the flip side, I have seen people take the plunge into investing in real estate, become overwhelmed, lose money, and quit by selling their rental property shortly after they purchase it.
By a simple conversation with a prospective real estate investor, I can usually tell if that individual is going to be successful or not at owning and managing a rental property.
I have noticed one trend over the years that usually determines whether or not someone is going to succeed or fail as a real estate investor.
The trend is…
How Long The Person Owns The Rental Property
Simply put, when someone buys a rental property and sells it after around the one year mark, this person is going to fail as a real estate investor. These individuals may end up buying properties again some years down the road. Even if they purchase more properties years after, this trend still holds true. They will more than likely sell off their rental property again shortly after purchasing it.
The reasons as to why someone would sell their rental property around one year after purchasing it could be many.
The most common reason is that people find the management of tenants the most difficult part. In turn, they end up selling the property at the height of their frustration.
On occasion I will meet former real estate investors who have owned properties in the past. They may be in the market to buy rental properties once again. The moment I find out that they owned their former property or properties for about one year, I know that they will end up failing again if they purchase more properties. This is what the trends have shown me time and time again.
Another important threshold is the…
5 Year Mark
I have witnessed real estate investors own and manage rental properties for a 5 year time frame and then sell their property or properties after the 5 years elapse.
The reason why some investors do this is because their mortgage term expires after 5 years. Instead of renewing their mortgage or obtaining a new one, they decide against doing both and end up selling their rental property.
For these types of investors, the decision to sell the property does not happen all of a sudden. I have noticed that these investors are either not pleased with their investment or not pleased with their tenants for a period of time.
The expiration of the mortgage term gives them a great opportunity to throw in the towel and sell off their ‘troublesome’ property.
So there you have it.
This post is short and to the point. However, it gives you valuable advice on how to avoid failure as a real estate investor.
Don’t sell your property. That is the bottom line. Despite what other people may tell you, don’t do it.
No matter how challenging the management of tenants become, don’t sell your rental property.
If you sell your property, you fail.
The objective of owning real estate is to generate cash flow and generate wealth.
Cash flow and wealth generation are not created by giving up.
Happy Investing!
Neil Uttamsingh
ps: Learn tips and tricks from experienced real estate investors on how to buy your first rental property by signing up for the First Rental Property Newsletter. All you need to do is enter your name and email address in the top right hand corner of the blog!
pps: I am a Licensed Realtor in Ontario and I help people like you buy their first rental property everyday! If you need help purchasing your first rental property or your next rental property, write to me at NEIL@FIRSTRENTALPROPERTY.COM. I will help you negotiate the best price, terms and conditions on your rental property. Buying in the US? No problem! I will refer you to one of my trusted partners. Happy Investing! 🙂
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