I Panic-Bought Real Estate During a Market High. Now What?

Dear Maxine,

I bought a rental property 18 months ago for $485K when "everyone was doing it" and rates were still climbing. I put 20% down. Now comparable units in the same neighborhood are selling for $420K. My realtor keeps saying "long-term, real estate always goes up," but I feel sick about it. Should I cut my losses and sell? Refinance? Just pretend I didn't check Zillow for six months?

—Sarah, Ohio

Here's the hard part: Yeah, that's on you. Not because you're stupid—market timing is hard and FOMO is real—but because you bought an investment property without a real plan. You bought because other people were buying. That's not a strategy. That's herding.

But here's the good news: you're not actually in crisis. You're down roughly $65K on paper. That stings. It also doesn't matter as much as you think it does, for one specific reason: you have a mortgage, not a margin account.

Let me explain what I mean. If you held a stock and watched it drop 13% in a year and a half, yeah, you'd be annoyed. But you'd own it outright. Real estate is different. You borrowed $388K to buy an asset. That debt has terms. It has a payoff date. Whether the property is worth $485K or $420K today doesn't actually change your ability to collect rent and pay down that mortgage over the next 25 or 30 years.

Selling now locks in your loss. You'll pay realtor fees (roughly 5-6%), closing costs, and taxes on any equity you've built through payments. You're looking at $20K-$30K in transaction costs alone just to walk away. That's a terrible outcome.

Refinancing only makes sense if rates drop significantly—we're talking 1-1.5% lower than what you have. Right now, that's not happening. So skip it.

Here's what actually matters: Is this property cash-flow positive or negative each month? Are you breaking even on rent minus mortgage, taxes, insurance, and maintenance? If it's positive or even neutral, keep it. If it's bleeding money, that's a different conversation.

Your realtor is half-right. Real estate does tend to appreciate over 20-30 year timelines. But that's not guaranteed—markets stagnate or decline in some areas for years. What *is* guaranteed: if you hold long enough and the market recovers (which it probably will, eventually), you'll be glad you didn't panic.

But you need to stop checking Zillow. Seriously. You own an investment, not a trading card. Check it once a year. That's it.

Your one move: Pull your last three months of bank statements and calculate your actual monthly cash flow on this property—rent in, all expenses out. If it's positive, you've got your answer: hold. If it's negative, we need to talk about what "negative" means in dollars and whether you can stomach it for 5-10 years while waiting for the market to recover.