That’s how I feel about nearly every one of the deals I’ve ever sold (16 so far, 13 renovated through Better Dwellings and three completed through Fund 1).
Why did I sell? Because I’ve always done deals with investor money, and investors always (understandably) want to get paid. And, because we don’t really make a lot of money on a deal until we sell, we’re not exactly going to dig our heals in and refuse to exit.
But, looking back on our deals, I think selling is often a mistake.
Why? By the time we’re done with a deal, it’s:
- Newly renovated, with permits
- Full of credit-checked tenants with good security deposits, on modern, reasonable leases
- Yielding 7-12% / year, un-levered (the range is mostly dependent on the entry price; the hotter the market, the lower the yield is likely to be)
If you can get yourself into that position in a decent neighborhood in LA, then you probably ought to put some reasonable debt on the property and hold it, right?