The sales market remains pretty hot and very competitive. It’s probably tempting to sell. But, if you own rental investments, and your strategy is to buy and hold, does it make sense to sell?
RentSimpli is a full-service San Diego property management company specializing in single family homes, townhouses, condos, mobile homes, small commercial buildings and small apartments. In today’s blog, we’re talking about when you should sell your investment property.
Do You Need Cash?
If you’ve earned a lot of equity and you’re ready to make other moves with that cash, it may be a good time to sell your investment home.
As an investor, you want to sell when the market is strong and inventory is low. When there’s not a lot of competition for homes like yours, you can maximize what you earn by increasing your asking price even to a number that’s slightly above market.
We’re in that market now, so if you need money – this is the time to make it. You can earn top dollar. Strong markets, high sales prices, and positive equity are all good reasons to sell your investment home.
Does Your Investment Need An Upgrade?
If you’re holding onto an asset that isn’t earning what you need it to earn, it may be a good time to sell it and buy something else. You can do this and defer capital gains taxes if you take advantage of a 1031 exchange.
Upgrading to a new investment property is always a good reason to sell. When you can earn more in rent and spend less on maintenance, you’re making a smart move.
How do you know it’s time for an upgrade? Two good reasons are when there’s negative cash flow and huge maintenance deficits:
- Negative cash flow doesn’t necessarily mean your investment is unprofitable in the here-and-now. If you’re nearly breaking even and you know your asset’s value is appreciating to the point that your long-term gains will weather a short-term hit, you should consider holding on to the property. But, if rents are dropping or not increasing, and you aren’t sure whether your property value will increase enough to make the negative cash flow worth it, you should sell.
- Do You Own a Money Pit? When you have an older home that needs constant repairs and expensive maintenance, it may be a good time to think about selling. Routine and emergency repairs eat into an investor’s return on investment (ROI) pretty quickly. While you’re probably budgeting for a bit of work every month or every year, you don’t want to be undertaking huge projects, if you’re not going to earn back that maintenance expense, especially with maintenance and repair costs continually on the rise.
Have You Had Enough of the Daily Grind of Property Management?
If you’re exhausted from the day-to-day responsibilities of owning one or more properties, it may be time to throw in the towel and sell. We recommend that before selling, however, you speak with a professional San Diego property manager. Your investment property may still be valuable and provide a good return on investment. An experienced property manager knows the local market and lets you know your rental property’s potential. It may truly be time to sell – or you could simply pass the reins over to somebody else while you relax and live your life.
We recommend holding properties for as long as possible to truly optimize the money you can make on your buy and hold real estate investment. But, there could be good reasons to sell – especially in the current market. Please contact us for a personalized assessment of where you are and whether you should sell. RentSimpli is a full-service property management company serving landlords, investors and property owners in San Diego & Riverside Counties, including La Mesa, El Cajon, Chula Vista, Santee, Rancho Bernardo, Escondido, Fallbrook, Temecula, and Murrieta.