As a real estate entrepreneur, I know that my rental investment assets have 5 profit centers. The largest of these is EQUITY. This guy has negative cash flow which can likely be remedied with the lease renewal. The smartest thing to do is get a part time job, rather than losing an estimated 4.7% compounded yearly interest value (over a 10 year market cycle)! His rent should increase at least 4% year over year. If it’s a single level ranch, then it will become far more valuable in ten years as the Senior Tsunami hits and boomers sell their 2 stories to downsize so that they can age in place (which will be an estimated 37% of them!!). I bought my first rental asset in 2000 and it wasn’t always a positive cash flow, but I sucked it up and lived poorly for a few years. Today, I’m a millionaire, heading toward the multi-milionaire goal in 5 (barring the likely nuclear holocaust). It’s tight for me right now because I’m not liquid. Hope he sucks it up, fixes whatever problems are eating his money, and takes whatever is left of that $100k and buys more properties!
If anyone wants to join my real estate podcast, please look up Not Your Average Investor Show.
I remember a story in Guy Kawasaki’s books about a new entrepreneur who was excited about a negative cash flow deal.
The experienced investor asked him how many negative cash flow deals he could do.
Then he asked him how many positive cash flow deals he could do.
;)
In my 40’s/50’s I self managed property doing the maintenance myself, now at almost 70 I use a property manager and repairs cost thru the nose, but worth it to avoid the hassle. So at my age I’d just assume divest myself of all rental properties and spend the money on wine, women and song.