Reasons to Sell Your Rental Property
Knowing when to hold off and when to sell real estate are two of the most important investment property decisions you’ll need to make.
Timing is everything. Sell at the right time and you get a great price for your property. Sell at the wrong time and you might not get top dollar or may stay in the market for a long time.
In this article, we’ll look at some of the legitimate reasons to sell an investment property.
When Selling Your Rental Property Makes Sense
1. It’s Part of a Plan
You might have bought the investment property knowing that you were going to sell it at a later date.
There are many reasons why someone might want to sell their rental property. Events like, getting ready to retire, buying your dream home, or sending a child off to college can prompt the sale. Other situations, that are not as planned, that could lead to this sale, are job layoff or a death in the family.
Even with a strategy behind your sale, you want to avoid making rash decisions. Sometimes, making decisions based on emotions can prove to be consequential, no matter how good one’s intentions are.
If you feel you might be acting irrationally you can consider hiring a financial advisor. With their professional advice, holding on to the property might make more sense financially, especially if the income stream is good.
2. You're Trading Your Real Estate Property
Sometimes, it might make more sense to trade your investment property than spend on replacing big-ticket items.
Your rental property, for example, might be due for some major repairs, like roof replacement or foundation repair.
An option is to trade the property to acquire an even better property. One that brings more income. This is an alternative to selling your rental property. You lose one but gain another.
3. You’re a Distant Landlord
When you are living close to your rental property, managing it is easy. You can always pop over when it’s time to do property maintenance, repairs, or inspections. But if you decide to move to a different location, coordinating these tasks might prove difficult for you.
You would certainly need the services of a property management company. Doing this would mean more operational expenses and fewer profits for you. Because of this, you may decide to sell the property and buy another one in the new location. Although, if their services is something you can afford, they can help you run your investment business from afar.
4. You Are Not Cut out for the Job
Being a landlord isn’t always easy. Aside from the routine business of screening and keeping tenants, there’s a whole mixture of legislation that you must abide by. Some are pretty basic, such as safety and health breaches that put your tenants’ lives at risk.
But there are many uncommon landlord-tenant laws that you are responsible for knowing. Some of these you might have never heard of. For example, entering the tenant’s unit without notifying them is not allowed. Unless it’s an emergency situation, you could find yourself in legal hot soup.
You might also unknowingly clean out the property after the tenant has moved out. If you dispose of their property, and the tenant later claims it has value, then guess what? You might find yourself facing a lawsuit.
If you find that managing your property is stressful, it could be time to sell your rental property. You could also decide to hire the services of a property manager if you want to still own the rental property.
5. The Property Isn’t Performing Well
Cash flow is the best way to determine whether your investment property is profitable or not. You can calculate this by subtracting all your expenses from your rental income. If you are losing money, it could be time to sell it.
But first, consider whether you are charging the right rent amount. You can do this by conducting a comparative market analysis. If you discover the rent you are charging is lower, then raise it as soon as you can. If it’s normal and you’re still not making any income, then it might be the best time to sell your rental property.
6. You Want to Cash Out
“Buy low, sell high” is a famous investing saying. It’s particularly a favorite for house flippers. Essentially, house flipping is buying a property, renovating it, and selling it for a profit.
Normally, house flippers buy a property in dire need of repairs. Then when the property is adequately upgraded and if prices have improved, they sell.
These are some of the excellent reasons that selling your rental property might be a good move. Note that you can sell your investment property at any time, even when occupied with tenants. Just ensure you have a solid reason and are doing it properly.