When a lender, institution or property owner has a distressed property, he or she is faced with a difficult decision. Sell now or hold on to the asset until it appreciates and can be sold later to get a better return on investment.
Many banks or financial institutions choose to sell for a loss in an effort to regain at least some cash for the asset. The thought of dealing with a troubled asset can seem unfavorable and daunting at first. Unfortunately, selling can end up being a costly decision. If the asset could have been better managed and the value of the property increased, the opportunity cost for selling early would be very high. What the asset is worth at the time of foreclosure is not the same when it is properly managed.
An alternative to selling for a loss would be to hire a company that specializes in the management of a distressed property or troubled asset. A company such as EpiCity can consult on a property and manage it completely creating a situation where the owner can reap huge benefits on a property. In many instances the asset can reach full capacity in a few months creating a sustainable or profitable situation until the lender or financial institution is ready to sell or maintain. Check out some of the following case studies to learn more.
Here are some tips to help you make a decision to sell now or sell later.
- Identify the Problem: Figure out why the asset is underperforming. Are the grounds unkempt? Are the tenants unhappy? Once the problem has been identified, you can then take the necessary action. An experienced consultant from EpiCity can help you through this process.
- Look at the Markets: It is important to look at a number of variables such as how the commercial real estate markets are performing before making a decision. If it seems like growth in the industry is occurring, holding onto the property and having it managed may be the most profitable option.