Don't Become a Property Hoarder or a Door Counter

[Jonathan Greene]

I have been seeing this a lot lately: people who hold on to underperforming properties because they add to their door count or to their self-worth as real estate investors. If you don't like buying hoarders' houses, don't be a property hoarder. A property hoarder keeps properties just to keep them. See the old mom-and-pop investors in their sixties that you are trying to buy off-market properties from.

This is like people who buy for cash flow but don't realize that with the best cash flow comes capital expenditures and tenant issues. You can't have your cake and eat it too. Appreciation is great, but not when all of that appreciation is eaten by the repairs you aren't doing. It's ok to sell properties. It's ok to sell properties at a loss (you get the downpayment back to repurpose into something better).

If you have four or more properties, this is what I would do (I just posted part of this as an answer to someone and thought it would make a good post):

1. Rank them from best to worst in cash flow

2. Rank them from best to worst in how much you like them

*3. Rank them from best to worst in management cost

*4. Rank them from closest to farthest in proximity

5. Rank them from worst to best in capital expenditures expected

*optional, not always necessary

Add those numbers together for each property. The lowest number is your best property, and the highest number is your worst property. Sell your worst property first. Then, take that money and repurpose it into something better.

Door culture is crazy. If you own ten doors and six aren't cash-flowing, why do you want to hold on to them if there isn't overwhelming appreciation coming? Don't be a property hoarder.

Are you guys doing this or seeing this? Who wants to sell their worst-performing property and turn it into a better asset?