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How can you deal with a bad real estate investment?

On Behalf of | Mar 25, 2021 | Uncategorized

A bad real estate investment is one that isn’t helping your business in any way. Some may say that it bleeds money, costing you much more than you’ll ever see in returns.

It is frustrating to deal with a bad investment property, especially if you can’t easily sell it off to break even. Still, there are some things you can do to improve your situation and deal with that bad investment choice. Here are some things to think about as you try to overcome these challenges.

Market volatility plays a role in real estate investing

If you’re worried about a current investment because the market has gone south, think through your next step carefully. Though the property itself may not be worth much at the moment, can you use it in a way to bring in more income until the markets improve? Consider renting out space or using the property in a way that brings in enough income to make holding it until the real estate markets improve a viable solution.

Tenants holding you back? They can hurt an investment

If you currently have tenants who are not paying their bills on time or who are causing extensive damage to the property, consider evicting them. You have limited space to rent and with which to earn money, so always do your research and bring the right people in to rent.

What should you do if a bad property purchase is weighing down your business?

Bankruptcy and foreclosure may help if the market turns and investment is no longer valuable. Chapter 11 bankruptcy gives you the option of restructuring your organization, which may help you offload bad investments and protect those that are better for your business.

More likely, you would benefit from a short sale, which would allow you to sell the property at a loss without having to make up the difference between the sale price and what you borrowed from the lender.

A bad investment comes in many forms. There may be ways in which you can manipulate the situation to make the investment a better one, but if not, then you might want to look into options to get rid of the property through a short sale, bankruptcy or other method.