You’re thinking about selling your rental property. But is it time? You’re right to be hesitant. Every investment has hard times. It’s not always wise to drop an investment too quickly. Let’s take a look at when you might want to sell a rental property.
You Can Make a Lot of Money By Selling
“A lot” is, of course, variable.
But there are times when a market can rise very fast (essentially, bubble). At that time, you might find yourself aware that you have the opportunity to cash out. Cashing out might be a good idea, especially if you have another area in which you want to invest. You can talk to a real estate agent about the local market.
Alternatively, Your Value Is About to Drop
Let’s say they’re about to put a highway right by your rentals. Your rental value is going to drop and your tenants are probably going to flee.
It’s a good idea to think about the future of your property. If you think your value is going to drop significantly in the future, it may be time to sell to someone who might not care as much (such as someone looking more for a home than an investment).
Your Rental Income Has Dropped Precipitously
A good rental is a combination of factors: location, upgrades, budgeting, and more. But there are some situations that are out of your control. What if a gas station is built directly next to your rental? What if the city industry has shifted? If your rental income has been dropping, it may be time to sell your rental property.
But keep in mind that some rental drops are temporary. If it’s a seasonal issue and the first year you’ve held your property, you shouldn’t worry.
Your Life Situation Has Changed
Maybe you can’t manage your rentals anymore. Or, maybe you can but you just don’t want to. Sometimes investors just want to cash out and switch to completely passive income. You could find a property management company… or you could just cash out your rentals.
This frequently happens when someone moves. You may move to another state and not want to manage rentals in another area. You can use a 1031 exchange to sell your existing properties and purchase new rental properties in a new area.
You Need the Cash
What if you just need the cash? Actually, this is one reason you might not want to sell your property. You can usually leverage the equity of a property for cash rather than selling the property altogether. There are a lot of advantages to doing this if you still want to maintain the rental.
Sometimes it’s better to sell a rental property that you’re unsure of to purchase a property that you’re more certain about. Consider getting a hard money loan from Hard Money Lenders AZ if you want to continue your investments.