Unload Property 'Dogs'
Before the Serious Bite

Question: I am losing sleep over this and hope you can help. I bought a rental house a couple of years ago but haven't made any money. I generally break even because of the high taxes and steep mortgage payment. The main problem is that the neighborhood where the home is located is now known as a "crack area," so it has become hard to rent the house. In addition, the home is in need of repairs that I can't afford to make. Should I try to find the money to make the repairs or attempt to sell the property as is? How can I get rid of this albatross?

-- Lisa, city not provided

Lisa: There is an old rule in real estate: "Dump the dog!" It refers to properties that are called dogs because, for one reason or another, they can't be rented or sold for a profit. It sounds like you have one of these animals on your hands.

Real-estate investments and drugs don't mix. If your house is in an area where drug dealing occurs, it is possible that, despite all of your best efforts, you could end up with a dealer as a tenant. If you do, collecting rent may become extremely difficult. Even getting an eviction can be a problem. Further, if the authorities discover that illegal activity is taking place in the house, it could be confiscated -- potentially resulting in a total loss.

I would dump the house, even at a loss. You can sell any property if you cut the price enough. The time, money and effort that you would otherwise spend on this dog of a property can undoubtedly be better spent on a better investment home in a nicer area.

-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent books are "How to Get Started in Real Estate Investing" and "How to Buy a Home When You Can't Afford It" (McGraw-Hill, 2002).

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