Real Estate Investing: Is There Ever A Time To Quit?
Is there ever a time to throw in the towel in real estate investing?
What if you haven’t gotten the results you hoped for yet? What if you messed up on a deal, and you are still stuck with it? What if an outside factor like a hurricane, poor partner choice, or market shift caught you off guard? Is there a time to draw a line in the sand and give up? Or is it just a matter of finding the right solution? Should you just keep pushing ahead?
There Will Be Challenges
There are always challenges, no matter what job, career, or investment path you choose. Most just don’t come with the great upside rewards that real estate can offer.
If you work in a grocery store you may have to deal with difficult customers, may have challenges in getting the best produce, at competitive prices, and could have difficult coworkers. Storms can hit, Walmart can move in next door, the rent can go up, and a variety of other hurdles can come along. Some have faced this challenge and folded. Others reinvented and found solutions. A little online bookstore which once sold books at a crazy low price, and when few people ever would shop online has become the behemoth Amazon.
In real estate you can face many challenges. It can be a challenge just finding your first potential property deals, then negotiating with sellers, then finding the money, and landing a good tenant or viable end buyer. There can be cash flow challenges, hurricanes, and changing market dynamics. Yet, some keep making it through.
So, first of all; recognize there is probably a solution, pivot, or leap that can be made to solve the problem.
Handling the Hurdles
Start by taking a moment to accurately assess the situation. Do the math. If you are thinking about investing in real estate in general; the benefits of pushing forward are probably easily 100x greater than any alternatives. Maybe you’ve made 100 calls, or even 1,000 calls. Maybe you just need to make 10 more to get a juicy deal. From this perspective it would be crazy to quit, right? Maybe you’ve lost a property or a dozen. Over the course of the next few years you could get 100 new ones. Or you could shrink back to flipping burgers or working in a cubicle. Which has the best upside potential from here?
Sometimes we are caught off guard by things. Sometimes we make mistakes. Sometimes we weren’t as prepared as we could be, but can do better next time with a little more knowledge and experience.
Of course, there are situations in which we really have to think about individual strategies, tactics and properties. Perhaps you perhaps you tried to host a new event and you are 8 weeks away and haven’t sold any tickets yet. Or you are half way through a rehab and it doesn’t look like you’ll get the retail price you first anticipated. Or cash flow may have stalled and none of the bills look like they’ll be paid for the next couple months out of no direct fault of your own. Do you bail on that event, property, or business? If you bail you will almost certainly lose some time and investment. If you push ahead the upside could be better than you expect right now, even if not up to your original expectations. Sometimes you only lose when you quit. Other times you may be wise to cut your losses, choose an alternative exit strategy, and come at it from another angle, and wiser. Perhaps like Microsoft or Berkshire Hathaway you’ll spin off that business or property, and march on to better times. Or like Facebook, Uber, Tesla, and most of our major automakers and banks you’ll need to find a cash injection from a partner, selling shares, or raising financing.
Summary
Talk to those that have quit, and those that have pushed through in similar situations. Of those that bailed you’ll probably hear that they wish they hadn’t in most cases, and they are still looking for their way back into real estate investing. Find out how others who made it pushed through.
When it comes to individual strategies, tactics, and properties, stay flexible. Be willing to try, test, and tweak. Understand that you won’t get it right 100% of the time. Build that into your math, but stay committed to keep pushing ahead to the results you really want.
