This will sound contradictory because I really don’t believe in regrets.
But to illustrate my point of view and my way of thinking when it comes to real estate, I’m going to use the word regret in the story I’m about to share with you.
About seven years ago, I was helping a client upsize from a condo to a home.
Seven years ago, the market for freehold detached homes wasn’t as hot as 2017.
Nor were condos in high demand.
My clients had found their dream home and made the decision to buy first, before selling.
We understood the risks. If we didn’t sell the condo they owned before the closing of the home, they’d either have to get bridge financing or extend the closing of the home they bought.
Neither became a feasible option.
I ended up doing something I really shouldn’t have done.
We didn’t end up selling the condo in time. And they would have been stuck with two properties.
I felt responsible for the way the move went.
So I helped them out by buying the condo.
That in itself wasn’t my regret.
Even though financing it was tough (I had already owned a property that I was living in — and I was self employed as a realtor).
I managed to secure funds and take ownership of the condo, at a price my clients needed in order to make their move… which was a price the market wasn’t prepared to pay at the time.
So there I was, an owner of two properties. One: my primary residence. The second: an investment condo.
The advantage was I knew the area. It was a prime condo in Scarborough Town Centre. Walking distance to the RT and shopping mall.
But again — in 2011, condos were taking 30 or more days to sell. There were no bidding wars. There was a lot of inventory to choose from.
I had no choice but to sell it.
I really didn’t want to invest in condos (at that time) since I was still working to build up the resources of my young family.
After struggling to ‘flip’ it to recover some of the costs I incurred from having to buy it from my clients, it still didn’t sell.
After a month of being on the market — a tenanted wanted to rent it.
I decided to go ahead and rent it out to the tenant. After all, leaving it vacant for months and months would be costly, and so would selling it for less than what I had bought it for.
Fortunately, we had a great tenant who leased the condo unit for a year.
But I was stubborn and I didn’t want to sell it.
It was also around the time that my wife and I decided to start a bakery business. And we needed money. Fast.
We listed the condo for sale again — and after 102 days of being on the market, it still didn’t sell.
We listed it at literally the same price we were asking the year before.
And still nobody bought!
It was such an agonizing experience.
After close to three months of agony and trying to scramble funds so my wife and I could launch our bakery, an off market buyer came about (by then it had already expired from the MLS) and swooped it from us.
Finally I had access to my money again. And didn’t have to worry about caring for a tenant. I went back to owning one property. And my wife and I were able to launch our bakery.
And that… was the regret.
No — not opening up a bakery business.
But selling the condo we had owned as an investment.
You’ve heard the saying: hindsight is 20/20.
And in this case, it was.
Fast forward to 2018.
The condo is still there. And has appreciated handsomely. Not to mention, it would have been forever rentable because of its prime location. And with the scarcity in condo inventory, the condo has shot up in value.
Unfortunately — we closed it down, and incurred a loss.
The lesson here is not about stopping yourself from starting a small business or entrepreneurial venture.
In fact, my wife and I had learned a lot from starting a bakery business. And didn’t regret a single thing.
The lesson is about the value of real estate — and what you should do to hang onto something that will give you cash flow, equity accumulation, and appreciation.
Had we hustled just a little bit more, and saw the value of keeping our investment condo, we would have accumulated so much equity and benefited from appreciation.
The rent would have paid everything down every single month. And even if we had to pitch in a hundred bucks or so here and there, we would’ve made it up just in the appreciated value.
It was a one bedroom plus den condo.
Back then, we were trying to sell it of for just under $230k.
Today, seven years later, one bedroom plus condos sell for close to $400k.
That’s $170k in appreciation. Plus the equity we would have reaped from a tenant paying down our mortgage.
I’m not saying every real estate investment is the right move.
And again, I’m not discouraging you from starting your own business.
But I hope this ‘regret’ results in a lesson learned… not just by me, but for every one of you considering real estate investing, or thinking about selling your current property to buy a bigger (or even smaller) one.
1.) If you can afford it, keep the property you own, make it an investment property, and use the equity you’ve built up to buy your next property.
2.) Start early — you’ll be surprised what years can do for both equity accumulation and appreciation at building your wealth.
3.) Have no regrets. I know, ironic considering how I call this my biggest real estate regret. But the truth is, lesson learned. And I won’t make this mistake again.