Property Management Blog

Selling an Investment Property - When Do You Know it’s Time?

Jonathan Maloy - Friday, December 13, 2019

Usually, holding onto an investment property for as long as possible is the best strategy, especially when it’s a rental home. You’re essentially having you tenant help you pay down your mortgage and cover your expenses while the value of the asset is increasing. However, every investment strategy is different. You might be ready to sell, and in order to maximize your ROI, you have to make sure you’re selling at a good time.

Take the time to strategize, consult, explore the sales market, and figure out an exit strategy. The things we’re discussing today will help you feel empowered to sell your investment property.

The Market Supports a Sale

When you have some equity built up in your property and you’re confident you’ll get the sales price you’re asking, it’s not a bad idea to sell. When your local market is showing high prices and your value has grown and possibly peaked, it’s a good idea to list your investment home. Otherwise, to earn the same profits, you’ll have to wait out less-than-perfect markets, and sell when the next strong sales cycle shows up. If you’re not planning to hold onto your investment for more than the next five years and the market is strong for sellers right now, go ahead and sell.

The Rental Market is Stalled

Perhaps your rental income has stagnated and you haven’t been able to comfortably raise the rent on your property in a number of years. Or, it’s getting more and more difficult to find well-qualified tenants. If there isn’t enough cash flow to make keeping the property worth your time and net loss, you should sell it. You can spend many years trying to make up the rent you lost during a tight rental market.

Long Term Tenants Move On

Perhaps you’ve had the same tenants for the last 10 years or more, and they have been fantastic and reliable. They’ve paid rent on time, helped you take care of the home, and reported maintenance promptly. They’re finally ready to move, and now you’re faced with some options for what to do. After 10 years, the property will likely need some work before you rent it out again. You’ll have to find and screen new tenants and hope they perform as well as your recent tenants did. If you don’t have the stomach to go through the full rental cycle again, you can sell your property and do something else. It might make sense during what will already be a transitional period.

An Investor Makes an Offer

Investor makes an offerSelling a home can take a lot of time and be an expense. It’s especially stressful if you have tenants in place. But, what if a buyer expresses an interest in your home and you don’t have to worry about listing the property, advertising it, or showing it repeatedly to prospects? When you have any investor who is interested in your property and makes an unsolicited offer, it’s a good time to think about whether you’re ready to let that investment property go.

Every investor has different reasons to sell, and the timing for you will depend on your personal investment goals and your financial strategy. If you’d like to talk about this further, please contact us at Rentals By Mark.

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