Shall I continue to hold or shall I sell today?

Shall I continue to hold or shall I sell today?

Real estate investing is always a balance between leverage and risk management. When the market shifts, especially in the GTA where cycles can be sharp, many homeowners and investors end up asking the same questions: If the property I bought is underwater, what are my options? If it's also giving me negative cash flow, what can I realistically do? And most importantly, has the so-called "crisis moment" actually arrived?

Negative cash flow is the part people feel the most. Market value going down is a number on a screen, but negative cash flow hits you every single month. When you're topping up hundreds or thousands from your pocket, the pressure becomes real. So people naturally wonder whether they should keep holding on or cut their losses.

The truth depends on two things: your personal financial situation and the nature of the asset you're holding. Before making any decision, you have to evaluate whether your property is a quality asset or a weak one. A good location with strong rental demand, even if temporarily negative cash flow, may be worth holding. A poor location with no long-term potential is a very different story.

This year, I've met several sellers who found themselves in the similar situations. One family bought a very expensive pre-construction condo and were suddenly facing the closing. The interest rate had jumped, the market was soft, and they felt forced to sell their current home just to make the numbers work. Emotionally, they were stressed every single day. But after re-evaluating their finances and speaking with multiple lenders, they eventually secured the mortgage they needed. The pressure to sell disappeared overnight, and they realized they didn't have to panic-sell in a bad market.

The second case was a young couple who bought at the peak. Their property dropped significantly in value. They had a million-dollar mortgage, and the monthly payments were heavy. They asked whether they should just sell and walk away from the stress. But after calculating everything carefully, a sale would still leave them owing the bank about $300,000. In that situation, selling didn't make sense at all. They were still living in the home, didn't need to rent elsewhere, and holding the property, even with negative equity, was the far more rational choice. Their "loss" only becomes real if they sell.

These real situations show something important: the decision to sell or hold is not emotional, it's mathematical. And everyone's math is different.

If you own multiple properties, the first step is to create a clean, simple spreadsheet. List out the purchase price, current estimated value, mortgage payment, property taxes, insurance, and rental income. Lay everything out so you can see which assets are strong and which are dragging you down. Most people, even owners of several properties, don't actually have a full picture until they see the numbers on paper.

If a property is in a great location and rented easily, but just temporarily negative cash flow because of higher rates, that may be worth carrying. But if a property is in a weak area with limited upside and requires heavy monthly top-ups, letting it go may actually save your financial health in the long run.

As for the question of whether we've entered a true crisis, I don't believe we're in that kind of environment. A real crisis means widespread defaults and failing banks. Thanks to the stress test introduced years ago, something many people hated at the time, most homeowners were forced to prove they could handle higher rates. Without that, many borrowers wouldn't have survived the past two years.

Still, negative equity and negative cash flow together can create serious strain. If both are happening, you need to take action. That may include restructuring your loans, renting out part of your home, finding cheaper insurance, refinancing a stronger property to support a weaker one, or reducing management fees by handling things yourself.

If even after all adjustments the numbers don't work, then selling the weaker property might be the only way to protect your overall financial stability. It's not about giving up; it's about strategic survival. You keep the core assets with long-term value and remove the ones that drain your resources.

On the flip side, if you can hold, and the property is in a fundamentally strong location, holding often makes the most sense. Today's weakness is a temporary cycle, not a permanent collapse. When interest rates start trending down, market confidence tends to return naturally. Real estate is slower to recover than it is to drop, but GTA fundamentals, population growth, immigration, limited land supply, remain strong.

At the end of the day, real estate decisions must be rooted in clarity, not fear. If you can hold, hold. If you must sell, sell early rather than late. And most importantly, treat every property individually, because not all assets deserve the same level of protection.



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