Good advice for Clients that want to sell Short on their homes

Have you come across seller's who will probably be short on a property if the were to sell but can maintain the property if they rent it out even though they might have a negative cash flow?? Now you aren't a financial advisor, but you can make a recommendation to them. Be very clear that they should seek the advice of a financial consultant.

First, see if they got into this property with zero money down or even got one of those exotic loans where they also financed their closing costs and even took money out. If so, these people are what we classify as investors. Have a frank conversation with them that as an investor, they rolled the dice and gambled and now they are the ones getting stung. And that's the way the ball bounces in the investment world.

Then, let them know that their time has come to pay the down payment. So if they don't want to damage their credit and go short, they can just continue to make up the deficit each month until it cash flows or can sell to cover the loan. It's that simple. Time to pay the piper as they say. Good thing is they rent it out they can deduct every expense on the property and depreciate it as investment property.

This was a big AHA for me when I heard this as it makes sense. You can't invest all the time and come out ahead. But, you can invest and learn a lesson the hard way. The trick is, learn from that lesson and don't repeat it.

Happy Production.