It is hard to turn around these days without finding someone who over-leveraged themselves in the last real estate boom by taking on an aggressive debt-to-equity ratio while the market was high.
Many property owners find themselves "upside down," owing more on their property than it is currently worth.
However, a percentage of real estate investors have a diverse real estate portfolio, with some performing and some non-performing properties.
For these investors, 2011 may be an excellent time to tighten your portfolio.
First, interest rates are "still" low.
Prior to these recent amazingly low offerings below 4% and 5%, consumers had not seen interest rates as low since the 1960's.
Close to 30 years.
If you have not locked a fixed rate fully amortized loan on your homes and income properties, you will be grateful to yourself for locking them in now.
Second, the next Southern California real estate "boom" is probably at least a decade away.
That means any non-performing properties in your portfolio are not going to suddenly start making money simply because of a market rise...
soon.
Finally, if you are able to free up equity as you tighten your portfolio, there may be exciting places to reinvest both in real estate and other sectors over the next few years.
If your real estate investment portfolio includes cash flow negative income properties, and you have been wondering whether to sell or hold, first look for a solution that creates cash flow or at least allows you to break even.
If such a solution is not available, and you are not comfortable covering the negative cash flow for the next several years, 2011 may be a great time to let that asset go and focus your resources elsewhere.