So you ended up sinking far more money into your flip project than your anticipated profit margin allows. After re-checking market prices for your finished property, you realize you’re faced with a very low profit or even a loss when you sell this one. Can you salvage this disaster by renting it instead?

My advice, based on long experience in this business: No, you can’t make an expensive flip project better by re-directing it to the rental market – you are only postponing the inevitable. Yes, you can find articles on the internet encouraging you to do just that – but they have not addressed these 4 critical points explaining why it is better to suck up the loss and move on to the next one.

1)      A solid, basic reason to stick with your flip strategy: You need the cash out of the property to continue flipping. As a rental, the property may not cash out with a profitable sale for a year or several years – or ever.

2)      You just prepped this property for sale, not rent. Once a tenant moves out, you’ll have to re-do some or all of the cosmetic prep and also make repairs.Not to mention that the repairs you did were for a flip, NOT a rental. This means that you put a lot more money (capital) into the property than you would if it were a flip. This is cash you need back for future flip projects.

3)      You chose the property for its characteristics as a flip project, not a rental.Such properties don’t always have the qualities for a successful rental, one that finds tenants quickly and has a consistently positive cash flow. Wishful thinking won’t make it so.

4)      In the end, you will merely have postponed the inevitable, while sacrificing other opportunities. There is no promise the market will go up enough to satisfy you on the eventual sale price on this property.While you dither, flip opportunities are passing you by and your capital is tied up.

My advice: Sell it and get what you can out of this one now, and keep moving forward. Do not get stuck on a sidetrack that doesn’t work out anyway. So your next project now has to shift to Plan B with a thinner wallet. It happens, it’s part of the business, you’ll rebound.

Learn from the experience of others who have traveled this path – don’t let it linger, sapping your resources and keeping you from your real property investment goals. Sell it now, move on to the next one and make your money back in the market place!

Would you rather move forward to another flip project with a nice payout within a few months, even a smaller one, or re-direct your plan to rental property management?

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