Sell at a Loss to Recoup and Increase Velocity?

[Chris Virgil-Stone]

I closed on my 3rd rental property in April. This was a marginal deal, cash flowing about $330/mo before maintenance and capex, managing myself. I put 25% down and used interest only credit lines for the DP. Since I bought this the “traditional” way as David Greene puts it, the velocity of my money is very slow.

I started to show it the beginning of May and was having little success showing it. The initial lack of people attending the open houses was a combo of a few things (school in session, trial and error for automating and improving processes, price which we then reduced, 2 bedrooms). We’ve had a few applicants that we approved, but something happens when we are about to sign a lease (guy gets drunk right before lease signing, girl doesn’t file notice to move and is stuck for 3 more months, etc).

After coming to conclusion about my strategy going forward, I want my money to work hard for me and to be turned over multiple times throughout the year. I talked with my realtor and they estimate that I can sell for $100k, which is $6k over what I paid. I also put in about $3.5k. So, after all is said and done, I would lose around $4-6k on the deal if I it sold for list. I know that I could recoup this in a single deal and I still have other money to buy. I also would like to focus on sourcing deals vs managing property, which has been minimal impact thus far, but showing property is a PITA.

The property itself is in metro Atlanta and they are building houses and more townhomes in the community. I know everyone’s situation is different, but I would like to know what would you do and why?

[Shiloh Lundahl]

@Chris Virgil-Stone I agree with what @Account Closed stated that if you really don’t like that particular way of doing real estate that you should switch it to a strategy that you do like.

With that being said though, the lease option strategy may be a really good strategy for you with this property. The lease option strategy is like a long term flip that reduces costs and maximizes profits and can turn a marginal deal into a good deal within just a few years. That is what we do. We take properties that have only a marginal return and we are able to make 2-3 times more in 3-5 years than what we would make doing a flip.