Been Feeling a Bit Discouraged

[Erin Auman]

We recently had a deal go south, which was disappointing enough itself, but as I’ve been reading the forums and listening to the podcasts, I feel like a big ignoramous when it comes to REI. It’s made me realize that the properties we have probably weren’t good investments, and it’s got me feeling a little discouraged. Any tips or words of wisdom from the seasoned professionals out there?

[Joe Villeneuve]

Originally posted by @Erin Auman:

@Joe Villeneuve

Long story short, right now they are turning into money pits. There’s not much equity, and I’m not sure how to go about funding the rehab that needs done. I feel like I might be at a point where it’s best to just dump them and start new.

 ...and there's your answer.

Do you know the similarity between Poker and REI (not gambling)? The secret to success in both is the same.

The answer:  Stay in the game.

If you continue to hold a property that is taking your cash (negative cash flow), you will be out of the game just as fast as if you were to keep putting chips in the pot of a really bad hand.

You haven't lost any money when you lose hands in poker, just like you haven't lost any money when you have negative cash flow...as long as you still have money left, and you get out of those bad "deals".  In poker, the chips from lost hands, are just in differents pile on the table...and can be recovered as long as you have chips left to stay in the game.  Money from negative CF, or properties with less value than cost, are not lost unless you let those properties bleed you dry.

In both cases, you can always recover those funds...on the next "deal".  The secret, is to get out of the current ones first...before they take away all your chips/cash, and eliminates you from playing in either game.