There’s no doubt about it—real estate is a great investment. There is huge money-making potential when you own real estate. However, like any other asset, not all real estate is a good investment. Timing has a big impact on your return, and in this article we will cover the main reasons people hold onto a property too long.
Reason 1. They are waiting for peak market to come back
Although the last couple years have been great for real estate, big increases aren’t sustainable forever. Many people are waiting for the real estate market to double or triple, which just is not likely in Baton Rouge in the next 5 years. People often hang on to properties, but don’t keep the maintenance up, hoping that the value will increase. Unfortunately, the opposite usually happens, and they get problems like mold, roof leaks, and broken windows, which make it harder for the eventual buyer to get the property back in top shape. Some property owners routinely monitor the market but don’t notice the significant price gain they were expecting. They observe its growth for a few years until it corrects itself and returns to the point of purchase. They expect to get a specific proportion of their investment, but after annual taxes, insurance, utilities, mortgages, and the initial investment, they are investing more money than they will ever see once they sell.
Reason 2. They inherited it from family
Inheriting a property from a very close relative, such as their parents or grandparents, is another reason why individuals hang onto a property for too long. Even if they have no intention of ever moving into, renting out, or developing on a piece of undeveloped land, they want to hang onto that property forever to retain a piece of it in their lives. They even do this for properties in other states. They don’t care whether the yearly taxes or homeowner’s association dues are draining their bank accounts. They aim to keep possession of the property for as long as they can.
Reason 3. They plan to build
People may keep a property for too long because they want to build on it, which is a more pragmatic explanation. They may have done an extensive study on the area and determined that it is ideal for them and their family, but they are unable to construct. Or perhaps they struggle to choose the ideal floorplan for their perfect house. They cling to the idea of construction but never carry it through. Even while they do pay taxes and perhaps even homeowner’s association dues, they continue to hang onto the land in the hopes that they will eventually construct their dream home.
Reason 4. They want too much money
The most common reason why people hold onto a property too long in Baton Rouge, Louisiana is very simple: they want too much money. They do not understand how houses are valued and think that since the house across the street sold for $200k, theirs is worth that too even though theirs is 500 square feet smaller. They simply will not accept anything less than the random number they got in their head. You can find people in this situation by just looking at the MLS for anything that has been listed for more than 90 days.
Reason 5. They have fond memories
Another reason why people hold onto a property too long is that they might have really fond memories. Emotions are hard to deny. Maybe their grandmother lived there and they grew up in the kitchen, making pumpkin pies for Thanksgiving with her, or learning how to make pistachio thumbprint cookies in the dining nook. Maybe it was their first house as a married couple, and they have lots of happy memories cuddling in the den watching movies. Maybe it’s the house their children grew up in, and they made notches in the door frame to mark their growth. These are all extremely strong emotions to override, but they do make sense as to why individuals in [market city], [market state] cling onto a home for an excessive amount of time.