sell

I Own a great rental property should I sell it

hey I've got this really great rental

property should I sell the darn thing

mmm let's discuss this one Clayton on

today's episode

alright let's dive into it

[Music]

here we are at our very first rental

property hey everyone welcome into the

investing in real estate show I'm

Clayton Morris I'm Natali Morris this is

the show where we help you build

financial intelligence so you can build

financial freedom now we've recently had

an email from somebody who was a new

fairly new real estate investor and I

think they bought a property maybe about

a year or two ago and they sent the

email and they how did they write the

email it was about owning a property it

was a fantastic deal yes renovation was

complete we really liked it

its cash flowing nicely but I want to

sell it right the returns are great on

this property it's an it's in an area

like it was all of these great points

right it was like the job market is

growing in this area the its

appreciating it's already worth more

than it was I want to sell it I think I

should sell it should I sell it no no so

we wanted to break this down a little

bit today and I wanted to kind of go

high level with you a 30,000 foot level

because I'm always reminded of something

that I learned at a real estate meetup

group many many years ago and I've heard

this as a cautionary tale from other

people if you go around the room and ask

any of the old-time real estate

investors in the room what is their

biggest regret in real estate investing

they will say universally oh I wish I

wouldn't have sold that property I wish

I would have held on to that deal I wish

I would have never sold off a portion of

my portfolio so it always came down to

regret yeah about selling houses that

they owned now again we always like to

have you go through your balance sheet

see what your family owns and make

decisions on turning assets into

performing assets right so if you've

already done that you've taken an asset

and turned it into a performing asset

you don't go back you keep that

performing asset now we are sympathetic

to the fact that sometimes you need

quick cash in your life in an unexpected

did Way right maybe a family member

needs an organ transplant plant that's

very expensive or I don't know you know

tree fell on your car you have no car

there are so many life circumstances

that we definitely understand the

problem is real estate is not quick cash

right and we have hope that we have

trained you enough to understand you've

taken an asset and turned it into a

performing asset but that asset now is

out in the world doing its job working

for its money it's hard to call that

back on a dime right real estate if

there is a downside and the only

downside really that I can think of is

that it's illiquid so to Natalie's point

if you need quick cash it's not cash

it's gonna take a while for you to

liquidate that asset it's gonna take a

while for you to find a buyer go through

the closing process and get that cash

out of the deal it's not available

quickly unfortunately right and to

become an investor you should not be

sinking every penny you've got into an

investment right there should be some

risk tolerance before you get started

even if you're starting with no money

hopefully you still have that rainy day

fund for when you blow it higher or yeah

you need a water heater fixed on your

main property where you live if you

don't have $800 at home in a rainy day

fund and you're thinking oh my gosh I

should sell that rental property hey

you're gonna drowned in the flood of

your house right before you sell that

thing so we just want to prepare you for

that because we don't want anyone to

have unrealistic expectations and think

oh well I could just sell that thing and

get this cash back and we refer you to a

video we did recently called when will I

make my money back right your money is

now again out in the world

it's a workhorse it's a goose it's it's

no longer sitting in a bucket right it's

it's you've sent it off right to do its

job it's doing a good job right because

why would you want to take that cash

that you make from this property that

you're gonna sell off and sit on cash

but you're going back to what we try to

teach you which is to not sit on cash

savings account if you're saving money

you are losing because of inflation and

the government printing currency so ten

dollars in the bank account today in ten

years in the year twenty twenty eight or

twenty twenty-nine is going to be worth

less historically than it is today

so you don't want to be sitting in

banking on investing in cash government

currency so if you've got a great

performing asset then and you really are

analyzing your portfolio and you're

thinking okay this thing has appreciated

really nicely right you bought it for a

hundred thousand now this market has

exploded its cash flowing great but it's

worth two hundred thousand great you

don't want to sell that off for cash you

want to be intelligent about this sale

if you're going to move and maneuver

your portfolio portfolio you may then

want to put that into a 1031 exchange

and I we have a whole video series on

how to do a 1031 exchange we have our

ultimate 1031 exchange video and blog

posts you can check out if you want more

information on that so that you're not

going to pay taxes on it you're gonna

roll it into additional performing

assets where you don't touch the profit

you don't have to pay capital gains on

it but this person I could tell was

quickly becoming a bit of a motivated

seller so to speak right there was some

underlying motivation for wanting to

sell an amazing asset and this is

exactly what wholesalers look for right

they look for people like kind of like

sharks right they're looking for someone

who's like I'm just scared I'm scared

I've got a great rental property it cash

flows great it's appreciating I don't

have any headaches with it it's managed

by a property management company but I'm

just scared I want to go back to

investing in stock market or have a

little cash on the side for something

right so wholesalers are looking for

people who just want the cash out of

their deals right and if you're the kind

of person who just wants the cash you're

willing to maybe take a little bit less

you're willing to take less because you

think you can get the cash faster right

in that sense you're not gonna get your

cash back at all you've taken an asset

turned it into a performing asset and

then turned it back for less of the

original asset this makes no sense

especially if your asset is cash flowing

and appreciating and then you're gonna

make capital gains taxes on the sale of

this property okay so we just again want

to manage expectations so you know one

this thing is yours now right so you

have to be prepared for whatever your

options are if again in the event you

need cash you can find a wholesaler to

get you some cash you won't get all your

cash out of it and close quickly your

decision or you can sell it on the open

market and hopefully do something

intelligent with it but you have to be

prepared you always have to have an exit

strategy right we have dozens of

properties and we know if we needed that

cash we would get rid of it this way

that should be in your head but we want

to never sell those things hopefully we

never have to so when I hear a question

like that I really think that there's a

lot of fear behind that question

so you're sending an email saying I've

got this great property I bought it in

Arizona a couple years ago and it's

doing great but I think I should sell it

what do you guys think and you're

listing all of these reasons why it's

really awesome well then there's

something going on there there's some

sort of a fear-based thing happening

with you if this is the question you're

even thinking about asking so maybe get

in touch with that part of it first and

maybe if you're you know confronted with

that maybe you should think long term

about how you should be approaching real

estate investing is it for me maybe you

need to take a little bit more time and

educating yourself on this process I

believe it's the number one way to build

wealth but there are a lot of steps

involved in building that wealth exactly

right so we wouldn't want you to be one

of those people who are in a room and

say ten years fifteen years later I wish

I hadn't have sold that I still would be

appreciating that cash flow in my life

but I gave it to someone else right one

of those old guys at the real-estate

meetup group you know I'm just I always

picture like the old guys from the

Muppet Show oh you know yeah I wish I

would have kept that property oh that

was a good one I love that wouldn't get

away now we do talk a lot about your

emotional connection to money and you

limiting beliefs when it comes to money

and how to make decisions not

emotionally in the financial freedom

Academy if you have not checked out

financial freedom at academy.com please

do this is a course that we teach

families together to learn to build

wealth with performing assets it's not

necessarily a real estate course but I

think it's great for anyone who wants to

build any kind of wealth in their house

and do it with all family members on

board so check that out

yeah financial freedom academy.com link

below and then check out all of our

other content here on the channel thank

you so much for subscribing and we'll

see you next time everyone