When is it good to take a loss?

[Nathaniel Hovsepian]

I have recently come to the conclusion that I need to sell a property that is too much work for me at the moment for a loss. I purchased the home for $26k and put another $6k into it.

I took the drywall off to replace it and found that all of the studs were termite infested and need to be replaced. It was at this point that I realized I might have bitten off more than I could chew and would end up just hoping to break even after rehab. 

I know that there is still room to make a profit if all goes well, but don't think it has enough upside to be worth me sinking another $60k into it, and not have anything left over for other investing in the meantime.

Knowing how much work there is left to do (like $60k), and having an ARV of about $105K I am listing it for what I purchased it at, and taking the loss on the extra I put into it.

I am curious to hear your insights about times when you had to deal with a loss, and how you dealt with it. 

[Bob Okenwa]

@Nathaniel Hovsepian

You gotta know when to hold em, know when to fold em, know when to walk away, and know when to run. There are several possible outcomes here, and none of them seem great on the surface based on your explanation of the situation. There's a saying that you shouldn't throw good money after bad, and this seems like such a scenario IMO. 

Spending that extra 60k doesn't greatly improve your chances of turning a profit as you'd be 92k into the project and would still have closing costs and commissions to worry about. Plus, there's no guarantee that you'd actually sell for 105k and could sell for a little more or a little less. To spend more time and money on something with already-thin margins seems like a bad deal.

I'd cut bait, try to wholesale it to another investor and hope to break even or write off the loss on my taxes for 2019 (if you could get rid of it in a week), and move onto the next deal.