I received an email recently from the owner of a three unit in Westbrook wondering if now would be a good time to sell. In the email, the owner stated that she and her husband had purchased the building in February of 2006 and made about $35,000 in capitol improvements. They now live forty-five minutes away and are tired of traveling to mange the building. She wondered if she could sell now and make her money back, or wait a year and try then. Below is my response to her inquiry:

“ In my mind, the most notable factor in Westbrook real estate values for the coming months will be the reassessment which is going to drastically increase property tax, including investment and owner occupied multi family property. Historically, Westbrook has been a nice alternative to Portland for investors looking to capitalize on the proximity to Portland, yet earn more of a return on their investment due to lower prices, lower taxes and comparable rents. This increased expense coupled with rising interest rates will put pressure on values and stagnate prices. I don’t see your building going up in value over the next year.”

I hate to give someone bad news, but there are some valuable lessons here:

1. Never buy a property that is out of the way for you to manage. No matter how good the numbers look on paper, over time, your time is worth something and you should be cognizant of this when looking for investments.

2. Unless the climate is ripe for a flip, plan on holding on to your investment for five years or more. Longer is better. Logistics should (with few exceptions) never be a deciding factor in deciding when to liquidate an asset.