Is there a market crash we fear is coming? Do we think this is the peak of real estate? Have we finally decided to listen to the social media doomers who keep telling us it’s another 2008? Not quite. Instead, our reasoning behind selling might make a lot more sense than you think. In fact, after you listen to this episode, you might decide to sell some rentals.
Thought you were supposed to “hold forever,” as many of the traditional real estate investors have told you? We have proof that selling can often make you much wealthier than holding—here’s how.
Henry Washington:
It’s 2026 and I’m selling a bunch of real estate. That’s right. I’ve got properties in my personal portfolio that I am listing on the market and I’m hoping someone else buys them before their values drop. I am constantly analyzing my market and that’s what it’s telling me to do right now. But this isn’t one of those real estate is dead videos. I’m not selling everything and I don’t think the crash of the century is coming. In fact, I’m also buying properties right now. That’s right. I’m selling and buying real estate all at the same time. If that sounds crazy, then let me break it down for you. What’s going on everybody? I am Henry Washington and I’m here with Dave Meyer. Today, we’re going to talk about selling some properties. Dave, are you selling properties?
Dave Meyer:
Yes, I am selling property, but I’m kind of always selling properties. So I don’t really feel like it’s that different from what I’ve done for the last eight years at least. And I want to talk about what I’m selling, what I’ve sold in the past. We should get into this. But I also, just before we get into this and people start panicking, I also want to say I’m also buying. So it’s not like a one way thing where I’m only selling properties right now. I’m also buying properties. That’s part of the reason I am selling some properties is because I want to buy other or different things. And we’ll get into that, but I just don’t want anyone to confuse, I’m selling off my whole portfolio. I’m only getting rid of stuff and I’m not reinvesting. That’s not the case.
Henry Washington:
Yeah, that’s very true. That’s a great caveat to make as I just left the bank grabbing a check to take to my title company because I am literally buying a house when I get done with this podcast.
Dave Meyer:
There you go. Exactly. So keep this all in perspective. Selling, I think is just a tool just like acquisitions, just like doing a renovation. It’s one strategic lever that you can pull as you build your portfolio. And I think it is an undertalked about and very valuable part of being an investor. I just never understand those people are like, “Buy and never sell. I’m never selling.” It’s just so stubborn and silly. It doesn’t make any sense.
Henry Washington:
Yeah. I mean, sometimes properties run their useful life in terms of kind of where they are from a maintenance perspective and how old they were when you bought it. It’s not logical advice. Now, in a perfect world, should you just keep everything you buy and amass a ton of wealth over a long period of time? Sure, that sounds great. But real life happens. Assets diminish beyond the point of your financial ability to bring them back to life. Your life finances and circumstances change, and maybe you can’t hold onto properties as long as you thought you could. Or sometimes you just need some money, Dave, and you got to sell something to get some money.That’s okay, guys.
Dave Meyer:
Yeah. Sometimes you just enjoy the fruits of your labor or take a little bit of benefit for paying for your kids’ college or a wedding or life. You need a new car, whatever. Real estate to me always has been and always will be a means to an end. So if there is a better end, if you need some other use of your money, if there’s a better use for your money, go do that. I think that’s another reason. But I also just want to reiterate that from a math perspective too, there are also just times that it makes more sense. You will make more money in real estate by selling and buying something else. And I think we should talk about all of these different scenarios today.
Henry Washington:
Yeah. I think there’s a lot to cover here and I want to jump into it. And I guess one of the things that I first want to talk about with you is you said you are buying and at the same time you said you are selling. So it sounds like you’re strategically selling some so that you have cash to buy something different, which may be a slightly different approach than what I am taking in my portfolio. I am selling some rentals, but I am not turning around and acquiring nearly as many rental properties. I am selling for a different reason. So what’s your theory behind what you’re selling and what you’re buying?
Dave Meyer:
I mentioned this, I think at the beginning of the year, but I’ve just sort of entered what our friend Chad Carson would call sort of like the harvest phase of my investing career. Just for everyone’s reference, Ched Carson, great investor. I’ve been on the show many times, has this framework where he says there’s basically three stages to an investor’s career. The first one is just starting. Get in that first deal, do your first two deals, learn a little bit. Then you go into growth mode, which is like when you got to hustle. It’s like you’re doing the Burge, you’re doing what Henry does, off market deals. You’re just trying to find ways to build wealth as quickly as possible. But at a certain point, I think for most people, five, 10, 12 years into their investing career, they reach a point where they want to get into what he calls the harvest mode, which is that you’ve built enough equity, you have enough properties, and now it’s time to realign your investments in your portfolio with the lifestyle that you want going forward.
There are some people who want to stay in growth mode forever. Our mutual friend, co-host of On the Market, James Daynard, that dude literally can’t stop. He would do it for free.
Henry Washington:
He would be miserable if he wasn’t
Dave Meyer:
Involved. I don’t know what he would do, but it’s good that he has this because he would go crazy. And there are other people like that, but I’m personally just not like that. Like I said, real estate is a mean to an end for me. And I am trying to go into what I’m calling sort of like the end game portfolio. I’m only 38. I’m sure I’ll still keep trading, but I’m starting, my buy box has changed. The type of assets I want to own in this harvest stage of my career are different. And I could just give you some examples, but I’ve bought a lot of really old properties in my career. I invest in the Midwest. I invest in Denver. Both have a lot of old housing stock and they’ve done great, fantastic. I do them all again. But at this point in my investing career, I just flew to Denver last week to look at some maintenance stuff.
I don’t really want to do it anymore. I invest out of state. I want stuff that’s really rock solid that I can go once or twice a year, look at these properties, say they’re good, and keep going. So that’s the general philosophy is just find stuff that aligns with me as a 38-year-old dude instead of what I was doing when I was 25 and had a lot of time and frankly, more drive to build a lot of wealth. I’m in a fortunate position where I’ve made a good amount of money in real estate and now I want to use it differently.
Henry Washington:
Yeah. There are some parallels to our stories. I’m also following a three-step framework, but I am following selfishly my own three-step framework, which is very, very similar to Chad Carson’s. And I’ve often said this that I see investing in three buckets, which is, again, your growth mode. So that’s a little bit about what you talked about in your three-step process. So you’re building and growing, and then you’re stabilizing, and then your third bucket is protection. And most people are going to spend time in two buckets at a time, but disproportionately in one versus the other. So when you’re first starting out, you’re spending probably 80% in growth, 20% in stabilizing. And then at some point you’ve grown enough and you’re finishing your stabilizing, so you’re spending the majority of your time and you’re stabilizing, and then you’re spending 10, 20% of your time in protection.
And me, protection means paying off assets, right? We don’t truly own the assets until we pay off the lender. And so protecting what you’ve built is part of my process. And part of my investing goal has always been to be able to leave paid off assets for my children. Part of my goal is that my children will be able to be the people that they’re called to be and not the people they have to be to make money. I want them to have income producing assets so that if they are called to do something that doesn’t make a lot of income, they’ve got some income coming in. So for me to do that, I got to get to paying some of these off. And I had this realization over the past couple of years that like, all right, well, how many do I need paid off to leave to my children?
And so I have done all the math and built all the spreadsheets and I have literally outlined the properties that I want to keep. I’ve outlined the properties that I’d like to keep but would be willing to sell and the properties that I absolutely want to sell to be able to achieve that goal of paying off the chunk of the portfolio that I want to pay off. And so I am selling assets as a part of that process. We’re selling assets and then we’re refocusing that money to pay off some of the other assets in our portfolio that we want to keep. You’re selling because it’s a good time right now. We’re finding great deals on the market. So it’s a great time to take some of that money and go buy other assets if that’s part of what you want to do in your real estate business.
But I think what I want people to take away from this part of our conversation is that both of us got started, built a business, operated our lives, and then saw how our lives have changed over time, saw how our businesses were running over time, and now we’re making adjustments based on our current or new end goals that we want for ourselves. And that’s like the best thing about real estate is you can build any life that you want and you can position your portfolio to provide or help providers support the life that you want. That’s the goal. This is what everyone should be doing at some level.
Dave Meyer:
Hell yeah. That’s the whole reason you do it.
Henry Washington:
Right. Does it mean everybody needs to sell something right now? No, but it does mean that you need to be looking at your portfolio, looking at your business and looking at your life and saying, “What is it I want for my life in the next one year, five years, and 10 years?” And then make decisions based on those things. And if the decision is selling gets you to those goals in the most efficient way, then you absolutely should be looking at selling.
Dave Meyer:
I couldn’t agree more. If you understand your goals, that’s how you start to decide if you’re going to sell. I want to get into that a little bit to help people understand what to sell, if they should sell. And it really does all start with goals. I think you heard Henry and I both just say that. I want to have a lower headache portfolio. Henry wants to de- risk his portfolio by reducing debt, both fantastic goals. It really makes these decisions about what to buy and what to sell a lot easier if you have clarity about those goals. But before we get into that, Henry, I got to address the elephant in the room. Are you selling at all at all because of market conditions and you think prices are going down or you just don’t like what’s happening in the housing market? Is that influencing your decision at all?
Henry Washington:
A very small percent of that is true. The market conditions are playing into it because it’s such a good time to sell because values are still up. And even though expenses and a lot of the things that come along with real estate are also up, what you’re really not seeing nationwide is value starting to drop a ton because of those things. In some markets, yes, values are coming down a little bit, but because values are stable, I’m able to capitalize by selling assets that make sense for me to sell and getting a decent chunk of money for doing so. Does that mean I’m doing it because I think values are going to plummet in the next year or two? No, but I know where they are now and that’s the decision I can make. I’m not guessing about where they’re going to be in the future.
I’m taking advantage of where they are now.
Dave Meyer:
Right. You know your goal, you’re responding to market conditions. That’s exactly what any investor in any asset class should be doing. And I’ll be honest, the way I’m going about it is definitely because of market conditions, but not because I think there’s going to be a market crash. I just think that the types of deals that worked for the last 10 years and the types of deals that are going to work in the next 10 years are a little bit different. Going forward, you’ve all heard my thesis. I think we’re not going to have a lot of appreciation in the next couple of years. And so I’m looking at these deals that I have and I say, if they’re not earning me solid cash flow, if they were just kind of those like mid-cash flow deals and they’re not going to appreciate, I don’t want them.
What’s the point of holding onto an old building that’s not going to appreciate and has mid-cash flow? I still made a ton of money off those deals from appreciation, but they have served their useful purpose. And I actually think, I know gasp, I think cashflow opportunities are going to get better in the next couple of years. Prices, in my opinion, are going to come down. I think rents are going to start going up in the next couple of years, and that’s going to make better opportunity for cashflow. So I’m just shifting towards those kinds of deals. And if they appreciate, fantastic, but I’m just changing a little bit what I prioritize, not because I am like, “Oh my God, these properties are going to tank.” It’s just like, no, there’s better opportunity out there and I can do better things with my time and money.
Henry Washington:
Yeah, I think that makes a lot of sense. And it’s actually a great transition into the next question I wanted to ask you. And that’s basically around for those investors that are listening, especially the ones who have a portfolio, maybe they have five properties, maybe they have 25 properties. What kinds of properties should investors consider selling or what trigger points should they be looking for in their assets to determine if it’s time to sell it or if it’s time to hold onto it? And I’d love to hear your thoughts right after this break. All right, I am back with Dave Meyer on the BiggerPockets Podcast and we’re talking about selling it all. No, we’re not selling everything. We are selling some assets.
Dave Meyer:
Buyer sales. If you want to buy Henry’s entire portfolio for 50 cents in the dollar, give them a call.
Henry Washington:
We are talking about selling assets. And before the break, I asked Dave, what trigger points or things should people be looking for in their portfolio to maybe tap them on the shoulder and say, “Hey, you might want to think about selling this asset.” Given that we are in a position right now where values are stable for the moment, so if they want to take advantage of values where they are, what should they be looking for?
Dave Meyer:
I love this question. This is one of my favorite things to talk about. And I’m going to give you one Dave nerdy analytical response and one maybe more applicable response. So the one nerdy thing is I always look at a metric called return on equity. It’s just basically a measure of how efficiently your money is earning you a return. And I look at that for all of my properties a couple times a year and the ones that aren’t doing well, I compare them to what I could go out and buy in the market today. And so if I go and see my return on equity on XYZ property is 9% and I can go buy a fresh deal and it’ll get me 12% or 15%, I’m probably going to sell it and just 1031 it into another deal. And this is actually really common for return on equity to decline over the lifetime of your deal.
And it’s a good thing. It’s a sign that your deal actually went really well because what happens is usually if you do like a renovation or a Burr or some type of value add, you get a lot of equity built up upfront. And that’s great because you make a lot of money in those first few years, but then you have a lot of equity trapped in those deals. And so your efficiency of how well you’re using that equity goes down. And so I always try to do this thing called, I call it benchmarking. I’m like, that’s why I always look at deals because even if I’m not planning to buy, I’m always looking at deals in the markets I invest in and be like, okay, I could get a 12% ROE, I can get a 15% and I compare that to my other deals. And that’s like the sort of the analytical way I do it.
The other way, honestly, a lot of it is just vibes. And I know that sounds ridiculous, but it’s totally true. It’s so true. Everyone who owns property knows this. You have that city property that you don’t want to own anymore. And it’s just like, sometimes you’re like, “Oh, you made me all this money.” I’ve gotten to the point where I can be not emotional about it and be just very objective about it and be like, “I don’t want to own it. It’s annoying to me. ” I actually, I went to Denver last week because I wanted to go see a couple properties, a major rehab going on in one of them, and I just wanted to see them. And I walked into one of those properties and I was like, “Uh-uh, nope, uh-uh, not for me anymore.” It was what I thought I was going to hold onto forever.
And I looked around and I was like, “I’m getting rid of this thing. I don’t want it. ” So there’s just part of it. And I think you and I probably have the ability to do that because you can look around a property and be like, “This is just going to be annoying forever.” And you could just feel that. And I was like, “I don’t want to be annoyed forever, so I’m selling it.
Henry Washington:
” Yes, that is absolutely true. I have walked into properties, rentals that I’ve bought and just in the middle of a turn and went, “I don’t want this. I don’t want this anymore. I don’t want to be here.” Absolutely. That’s so true. I love it. Selling based on vibes and we joke about this, but there is absolute truth to it. And the more seasoned you get as an investor, the more you’ll start to understand those things and those feelings.
Dave Meyer:
That’s right.
Henry Washington:
So for me, I’m looking at, is the property performing like I underwrote it to perform? And Dave and I are similar in that we underwrite very conservatively. And so most of the time properties end up performing better than I underwrote, but sometimes they still don’t. And you have to know that so that you can make a decision. And it’s not just like, “Oh, it’s underperforming. Sell it. ” For me, it’s like, all right, is it underperforming? All right. If it is underperforming, then what is it going to cost me in terms of money and time to get it to perform like I want? And before I even look at that, I think through, is this the kind of property I want to own 10 years from now? So if the answer is yes, I want to keep it for a long term. I love the location.
Then I look at what’s it going to cost me in time and money to get it to perform like I want? And then once I do that, I can make an informed decision. I can decide whether, let’s say it’s going to cost me $25,000. Now my decision isn’t do I sell it or do I spend 25 grand? Now that decision is like, do I spend the 25 grand to get it to perform or is my money better spent selling it and then taking the money I would’ve spent on that property and buying another asset? And that’s based on you understanding your market and your buy box because right now what I am seeing is great buying opportunities. So if this was 2025 or late 2024, I might consider fixing an asset and keeping it because the cash on cash return I would get from buying a new asset was not as good as it is now.
And so now the decision in this year might be, “Hey, let’s just take this and go buy a different asset because I can get so much better numbers. I can get a higher return for that money that I’m going to spend.” Whereas a year ago, that wasn’t the
Dave Meyer:
Case.That makes so much sense. I think Henry and I could probably do this by vibes because we just have, as an investor over time, you will get there if you’re not there yet. You will just be able to walk into a building and be like, “This has potential or it doesn’t.” You just know if you know your market well, if you know what construction costs, you know what rents are going to be in the area, you know what people want to rent or buy, you’ll be able to know. And the vibes that I’m talking about is basically just a cost benefit analysis that you’re doing in your head. I’ll actually just give you an example. I’m choosing to sell a property. It’s a duplex. I got a great buy on it. I haven’t hold it that long, but because I’ve got a good buy, I could sell it and make money off the equity.
But the layout of one of the units is weird. And I was getting quotes for doing the layout. I think it was going to be around 30, 35 grand to do the renovation. The amount that it was going to increase my rents was like 200 bucks a month, which is not very good in my opinion. And it was going to be 30 grand to … I talked to my agent, maybe the ARV was 50 higher than it was going to be. It’s like, so am I going to invest 35 grand to make 15 grand in equity and 200 bucks a month in rent? And I was like, no, I could just keep that property, but it’s not going to rent very well as well as I want to with the weird layout. And I have a lot of equity that I’ve built in this property.
So why wouldn’t I go find a property, find a project where I could do a better Burr, do the kind of renovation I’m talking about where the numbers are just better, where it’s going to increase my rent more than 200 bucks a month, where I’m going to earn more than 15K in equity for investing 35K. For me, it didn’t take that mathematical analysis. I could just walk in and be like, okay, this is not going to work. But that’s kind of what’s going on in my head. And if you’re sort of a newer investor, you should just do the numbers, get the quotes, run the comps and figure that out. And I think you’ll see that sometimes selling actually makes a lot of sense.
Henry Washington:
Yes. Some of the other reasons I sell, look, I’d be lying to you if I told you I hadn’t sold a property that positively cash flows just because it’s a big pain in my butt. So sure, I will sell a headache property.
Dave Meyer:
Well, what kind of headaches? I’m just curious because I have a good example I’m thinking of this, but what do you see as headaches? Is it maintenance?
Henry Washington:
Two reasons. It’s either maintenance or it’s just super hard to rent. When it rents, great. Cashflow’s great, but maybe something weird about it makes it hard to rent. And that is a big headache in my butt because vacancies kill you.
Dave Meyer:
That’s the one I was thinking of. I sold a property because my neighbor just kept bothering my tenants and they kept moving out. I would get all of these great tenants and they were just like, “This guy, Ed,” that’s his real name. So weird and so- We are not
Henry Washington:
Hiding names to protect the innocent here.
Dave Meyer:
I won’t share his last name, but Ed, dude, killing me. And I would have these great tenants and they’re like, “We’re sorry we love the house, but we’re leaving because this guy won’t leave us alone.” And I tried talking to him and eventually I was like, “You know what? I was just going to do something where I don’t have to deal with this guy because he’s annoying to me. ” And I think the key is I could do that because I had a good buy, because I executed my business plan and I had already built enough equity in this property that if I went to sell, the transaction costs aren’t going to kill me. I think the problem you get in, and I think that we should talk about this a little bit, is when you’re forced to sell within first year, two years, that’s where I think you really can get in a little bit of trouble.
That’s the situation that I think I personally try and avoid.
Henry Washington:
All right, Dave, since we are landlords talking about selling properties either because they got the wrong vibes or the numbers don’t make sense to us or we’ve maxed out the equity, are we saying that new investors should be scared to buy properties from older investors? Hold that thought because I want to hear your answer right after the break. All right, we are back on the BiggerPockets Podcast. I am here with Dave Meyer and we are talking about why we are selling off some of the properties in our portfolios. And some of the things that we’ve covered is basically understanding and tracking the data for your portfolio so that you can make informed decisions about what you should or shouldn’t sell based on what your return on investment’s going to be for selling based on whether you think you could buy something new that’s going to give you a better return than either fixing or selling something that you currently have.
But just in general, being able to evaluate your portfolio on a consistent basis and make informed decisions. I believe that every real estate investor has to do this and has to do this well if they want to maximize their portfolio. But we’ve been talking a lot about what we are selling or why we’re selling some of these things, and I bet it’s giving some new aspiring real estate investors pause about buying properties from old crotchety landlords like us.
So I want to hear your thoughts. Should new investors be scared to buy properties from landlords who’ve owned properties for ages?
Dave Meyer:
Absolutely not. I actually think it’s some of the better opportunities, to be honest. I have definitely sold properties where I’m just like, “I don’t have the hustle anymore to do this. ” Or my portfolio is so big that I don’t want to dedicate all of my time to this one property, but I’ve definitely left meat on the bone when I’ve sold properties to people. I think that this happens quite a lot because investors like Henry and I, or you talk to James who’s always trading out properties as well, it’s just sometimes it’s not your buy box at that perfect time, but different properties work well for different people at different times in their life. So I can just think of properties I’ve sold that would’ve been a perfect live and flip or a perfect house hack for someone, but I’m not house hacking anymore. So it’s not a good idea.
I’ll also just throw out, I was looking at a deal, a landlord who owned a couple of properties, it was three, four units in a neighborhood I like, and unfortunately he passed away and his wife had the property, didn’t know what to do with it. There had been a lot of deferred maintenance over the last couple of years, but I was like, “This is a pretty good deal. The deferred maintenance rents are well under, so they’re pricing it low, but I can actually make something out of this. ” And I think you see that a lot with older landlords is that they don’t keep up with current rents and that’s an opportunity. Are there some people who are going to demand top dollar and they’re hiding something? Yes. But if you do your due diligence, I think actually buying portfolios or buying from old landlords is probably one of the better options right now.
Henry Washington:
Yeah. I mean, a solid chunk of my portfolio came from landlords getting out of the business, but this is the entire point of the underwriting and due diligence process That’s what it’s for. Focus your time and efforts on getting really good at understanding your buy box and getting really good at analyzing deals and making the offer that makes sense for you, not the offer that you think the seller will accept.
Dave Meyer:
That’s right.
Henry Washington:
And I think that new investors especially get caught up in this. They either don’t make an offer because they just assume the seller will say no, and so they make a decision for the seller, or they increase their offer because they feel like what they need to pay is too low, but they really want the deal. And so they fudge the numbers a little bit and increase their offer because they don’t want to hurt somebody’s feelings. You cannot do this. Do not be afraid to buy from anyone.
Dave Meyer:
That’s right.
Henry Washington:
Get good at underwriting. Get good at analyzing. Get good at knowing what questions to ask about deals to give you the comfort you need for that deal and then buy the ones that work. It doesn’t matter who owns it. Control what you can, and you can control how you underwrite, you can control what you offer. What a seller wants for their property is between them and Jesus. That ain’t got nothing to do with what I can pay for it. And that goes for me too, as a seller of properties right now. Just because I’m asking 500,000 for a property doesn’t mean that’s what somebody has to offer me. If somebody offers me something for 250 for it, I’ll look at it. Does it mean I’m going to accept it? Nah, but shoot your shot.
Dave Meyer:
Yeah, 100%. That makes total sense. This property I was just talking about, the one that the duplex I decided to post on the market, my agent was like, “We could list it for, I think it was like 290, 295.” He’s like, “Or I might be able to find someone off market will buy it for 285.” And I was like, “Great, sell for 285.” For me, the time is more important. And so someone could be walking into 10 grand of equity because I don’t want to be inconvenienced. And that’s just how it works.That’s how a lot of investors work. Sometimes you trade money for convenience. And if you’re an early investor, you trade convenience for money.That’s kind of the way this works. If you are going to hustle and go do these things, maybe you’re going to be a little inconvenience, but you can get 10 grand of equity off me today.
That’s just how investors work. So I think that’s why you need to be able to underwrite, understand what the value of this property is and be able to understand where it fits, what role it plays in your portfolio. And you can absolutely find good deals from existing landlords.
Henry Washington:
What would you say should be the timeframe that investors should be analyzing their portfolio? Should they do this once a month, once a year? What do you think makes the most sense?
Dave Meyer:
I would recommend most people do it twice a year, at least. I probably do it quarterly because I’m just a crazy person, but I think twice a year is the right number for most people. You can get away with once a year if you just know you’re not going to do anything that year. Sometimes you’re like, “I’m so busy. I have a new job. I have a new baby.” Whatever. You’re just like, “Fine.” But if you’re trying to grow your portfolio and actively manage, I think six months, something like that.
Henry Washington:
I think you should be doing it in the winter and in the spring at a minimum, because it may take you a year to get a property ready to sell so that you can maximize the value. It may take you six months. And so if you want to be strategic with it, like we are right now, I am listing several properties that I probably could have listed a couple of months ago, but we held off on listing them until this spring and we were actively getting those ready to sell so that we could list them in the spring. So had I not been looking at this six months ago, I wouldn’t be able to capital eyes on what I’m hoping is more bang for my buck by having them ready to go and put on the market in spring. It may be that you’ve got to non-renew a tenant and just put them on month to month so that you can be ready to list that property.
It may be that you’ve got to get a tenant out so that you can do some refreshes to that property before you list it. There are things that are going to have to happen with a property before you can get the most value out of it. And if you’re not doing this at least twice a year, you’re going to miss out on opportunities to list them in favorable times in order to maximize the return that you’re going to get for selling that property.
Dave Meyer:
That just kind of happened to me. There’s this property I’m thinking about selling. I haven’t decided yet, but I was looking at this in January and I was like, oh, the lease isn’t up till the end of July. So there’s no reason for me to really think about it. But I said in my calendar, think about this again in April because then I would have three months to figure out whether or not I’m going to sell it, talk to the tenant if they’re going to re-up, just do the analysis. It sort of just reminds you. And I know if you only have one property, you probably know when your leases are up, but when you get to a bigger portfolio, you forget. And so you just kind of need to be doing this continuously. I think that makes a lot more sense. So Henry, before we get out of here, one last question.
What do you say to the people who say buy and never sell? What’s your last piece of advice for people listening here?
Henry Washington:
I think buying never sell is just unrealistic advice. Let me give you an example. If I bought a hundred year old house, and even if I spent some money renovating that property and now I’m 20 years in, well, now that house is 120 years old. If the market is favorable in terms of being able to buy something that’s going to give me a higher cash on cash return than the property that I currently own, even though I’ve been paying on it for 20 years,
If the maintenance is kicking you in the teeth, it may make sense to sell that asset to go buy a better quality asset because my goals and what I want from my family and what I want out of my real estate business, that older property is not the best fit for my goals. So it’s too much of a blanket statement to say you should never sell. Sometimes you just got to sell an asset because you might need some cash. I think people who say they never sell is crazy to me. That just means to me, I just think you have a bank account full of money and you never, ever, ever have to worry about any of the expenses involved in real estate because you’re just flush with cash all the time.
Dave Meyer:
Yep. I mean, it doesn’t make any sense. I’m glad we’re doing this episode. And part of the reason I wanted to do it right now is because the other day, my real estate agent in Denver just sent me a text and was like, “This property that I used to own and sold just hit the market again.” So I’m just going to give you the numbers right now. I bought this in 2010. It was my first deal. Bought it in 2010 for 462. I sold it in 2018, so eight years later for $1.025 million. So huge, huge return. I had three partners on that deal, but huge return there, right? Massive. But it was a pain in the butt. It was just because we had some issues with tenants, we had break-ins. It was a pain in my butt. Know what they’re selling it for now?
1.050. So I made about $600,000, and then in the eight years since, people have made $25,000. I’m just saying, I haven’t timed all of them that well, but I just want to show that I took that money. I 1030 to wonder into two other deals that have done very well. And I just think I saw the writing on the wall that the property had reached its maximum age. Now, this might go back on scaring people from buying from people like I said. But I just want to show people that this actually works. I didn’t pull all my money out of the market. I reinvested it. Those deals have done well. I’ve actually sold both of those deals and I’ve reinvested those again. So that’s my style of investing. I like optimizing, but I just want to show you that it actually works. Had I held onto that deal forever, like everyone said you should have, I would’ve made a lot less money.
So I just want to give you some examples and I have plenty more where this actually works. So just think critically about the best way to use your time and money. That’s the job of the investor and selling is a crucial tool in your tool belt as an investor.
Henry Washington:
Again, I know people are listening to that and thinking, oh, you got lucky in time in the market. And was there some luck to it? Sure. But there’s a lot of experience and research to that too. At the beginning of this episode, you talked about you think that values are going to either stay flat or come down a little bit over the next few years. And if you’ve been in this business for the last five years, you know we got huge equity bumps in between 2020 and like early 2023, like drastic equity bumps. And so if you have an understanding of real estate in general, what’s going on on a national perspective and then diving deeper into what’s going on locally in terms of values, it can help you make decisions like this. So what Dave is essentially saying is, “I don’t think I’m going to get a massive equity bump in the next few years.” So if I’m going to sell something, now’s probably a good time to do it because it’s not like I’m going to miss out on massive amounts of equity by selling that asset over the next couple of years.
So it’s not just luck. It is critical thinking and it is understanding your market and knowing what data points are important to those things.
Dave Meyer:
I think in the kind of market, in a buyer’s market that we’re in, it’s a good time to reload right now. It’s a good time to take stock and say, “Hey, my portfolio has been great. I am super grateful for everything that it’s done for me so far. Might need to change what it looks like a little bit for the next phase of my investing career.” And that’s where I’m at, but I encourage people to think like that all the time, every year. Think, is this the right portfolio for me at this point in my life? And if not, bite the bullet, sell some stuff, reallocate, use some of your money, have fun, go on vacation, whatever you want to do.
Henry Washington:
Buy the Lambo, post it on social
Dave Meyer:
Media.
Henry Washington:
Tell everybody how to get rich in six years.
Dave Meyer:
That is what I’m going to do. What’s this property? What’s this two block sells? They’re going to go buy a Lambo.
Henry Washington:
Oh gosh, that’d be the day. That’d be the day.
Dave Meyer:
Yeah.
Henry Washington:
For the record, Dave will not do that. Dave would buy like a brand new forerunner before he buys a Lambo and then drive it for the next 50 years is what he would do. All right everybody, thank you so much for joining us on this episode of the BiggerPockets podcast. Again, it is okay to sell assets. Just be strategic about when and how you do it. And in order to do that, you’re going to need information, which means you need to have your accounting and bookkeeping in order so you know which assets in your portfolio are ripe for selling. And you’re going to need to understand a little bit about the real estate market so that you can know if it is a good time to actually turn around and try to sell those properties. But don’t listen to anybody that tells you you should never sell.
You can’t make blanket statements. Every investor has a reason for investing. Every investor has a life. So build your business and make business decisions around the performance of your assets and the life you want to live. And I think you will be a much happier investor than trying to hang onto something just because you think you’re supposed to. As always, this is Henry Washington. He is Dave Meyer. We appreciate you being here and we’ll see you on the next episode of the BiggerPockets Podcast.
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