After more than a year of wide open possibilities, the past week of being squashed between a rock and a hard place has been more than a little uncomfortable.
We live on a tight budget these days, given that we are both entrepreneurs in the early years of our businesses. Everything we make pretty much goes into creating more business. So you can imagine that the risk of rental properties, while interesting with a cushy salary, is less than appetizing now.
We’ve been trying to sell the three units since last Spring. One is still up on the market and has been sitting there for more than 8 months, generating more than a grand in losses.
A thousands bucks used to be no big deal, but nowadays there isn’t a thousand bucks hanging around at the end of the month. Therefore, offloading this negative cashflow unit is an urgent priority.
How can a seller make that happen? There’s really not much you can do, which is why we feel a little crazy.
Do you invest more into the already difficult situation to try to generate your desired outcome? For us this would mean putting a little lipstick on the unit to make it more attractive, around $500 worth, which is a gamble since it still may not sell.
Do you cut your losses and dump the problem as quickly as possible, taking a loss so that you can move on with your life and your sanity? This would be the equivalent of selling at a loss or engaging the bank in a short sale negotiation.
Do you ignore the problem and wait to see what happens since it’s pretty much out of your control anyway? This isn’t an option in our minds since the unit is negative cashflow and we no longer have the financial tolerance for the risk of an HVAC service call or rent loss when tenants move out.
Feeling out of control, especially when you have so much riding on the line, feels icky. There is no reliable method for predicting what outcome any particular course of action will result in, and unfortunately for us, all of the options are mutually exclusive, which is often the case when you are in a tight spot and have to make a move.
How do you make a wise decision and get back to living when the boulders start closing in?
- Deep breaths. If you’re a control freak like me, panic can set in pretty quick. Take a walk. Watch something funny and then come back to it. Get some sleep. Don’t let the swirling spiral of doom take hold.
- Pros and Cons. I know it sounds basic, but it so helpful (especially when there is more than one of you stuck in the rocks) to write down the actual facts of the situation and every possible option – without judgment.
- Get more info. As much as you can. It feels better to make a quick decision and move on it because it is so dang uncomfortable to not know what to do, but fight the urge and ask around. You’ll probably be surprised at the insights others can offer based on their own experiences or simply from an objective (read: non-emotional) perspective.
- Get perspective. What’s the worst case scenario? Will the world end? Will anyone die? If so, it’s probably a good idea to stop reading a blog and get some professional help right away, but most likely these possibilities aren’t on the table. In fact, it’s probably more likely that your world ends while driving to work than out of this temporary difficulty. You face risk everyday, this type of risk just feels worse because your decision will represent a direct link to the outcome.
- Make a decision. When you stop putting so much pressure on yourself to save the day or whip out a miracle, you realize that you are not God and will have to make do with the best information available. Make the decision and prepare for the potential outcomes. Then leave the boulders behind and move on with your life.
Note: I stink at following these steps, so this as much a pep talk for myself as it is meant to help others who stink at this. I panic. I awfulize. I cry. I make it all much worse than it needs to be for at least 48 hours.
I got that out of my system last week and we are now on step 3 in our current dilemma. Hopefully once we know the worst case scenario, I can get perspective and reclaim my mental space for other more interesting and productive concerns.
it sounds like life is happening to you- going through the steps you outlined is part of the learning process of learning to be wise. It will work out.
What great advice. I, too, stink at that process. My wife and I both do: we seemingly would rather analyze options forever than to get to step 5, and actually make a decision. We live in step 2 because, as aggravating as it is to be stuck in a bad situation, it is less scary than the potentially bad consequences of our decision.
I wish you guys the best in with your rental. But like you said, you’re not God and some stuff is just out of our control.
We get stuck at Step 2 as well, but it’s because my spouse desperately wants to skip steps 3 and 4 to get to the comfort of having made a decision while I need the options laid out in Excel with color coded labels and monetized impact formulas so that I can pretend to be in control. Decisions, decisions, decisions.