Knowing When To Cut Your Losses
Buying and selling real estate is one way to guarantee an interesting business career – but it is not without its drawbacks. One of those drawbacks, the significant risk factor, is part of what makes it interesting. But if you can play the game well, you need never become one of the many people who falls under the intense pressure of trying to turn a profit. Sometimes, real estate is as much about trying to find the smallest loss on a deal when the avenues of profit and breaking even are closed off to you.
Whenever you buy a property with the intention of increasing its resale value, you do it with some amount of optimism. The mere thought of “If I can get this work done, source the materials and get it to market on time and on budget, then I will make a profit”, leaves open three ways that things can go wrong. Maybe the work will not get done as well or as quickly as you had hoped. Maybe the materials will prove harder to source than you had planned for, and as for the schedule … well, unforeseen circumstances make fools of us all.
The fact is that sometimes, despite your best efforts, you will see your intended profit begin to shrink – and sometimes, it will disappear altogether. It is at this point that you will be tempted to bring everything to a sharp conclusion and just sell for whatever someone will give you. This is a big mistake. If you hold on and set a new, realistic deadline and price you can at least cut your losses, and maybe live to develop again.