As professional property managers and asset manager, we are always encouraging investors to hold onto their investment properties as long as possible. You almost always have a better chance of maximizing your returns when you hold onto the home and allow your tenants to help you pay down the mortgage.
But, there are always reasons to sell. Today, we’re taking a look at what types of conditions ought to be met before you sell your investment property.
You Have Other Investment Plans
If you need cash and you have enough equity in your property, selling might seem like a good option. Perhaps you’re preparing to invest elsewhere or a child is going to college or you’re buying a new property for yourself and you need to gather some cash for a down payment. If the sales market will support the asking price that you’ve targeted and you can get enough out of your investment property to make a sale worth it, go ahead and sell when you have other plans for the capital.
Don’t forget that you can always do a 1031 Exchange if you’re simply tired of one property and you’d like to invest elsewhere. There are some strict timelines and guidelines that need to be followed when you’re doing this, but it’s one way to avoid tax penalties when you sell a current property to purchase another.
Your ROI Isn’t What You Expected
Smart investors crunch all the numbers before they even consider buying an investment property. You might have done that when you signed the deal, but perhaps your investment isn’t delivering the yield or the capital growth that you anticipated. There could be many reasons for that, and if you feel like you’ve given the market and the investment every opportunity to take a turn for the better but it hasn’t happened yet, you might want to sell before you find yourself at a deeper financial disadvantage.
Maintenance and Repair Expenses are Overwhelming
A property that always needs some type of repair work is going to drain you financially, and if you find yourself at the point where you have to decide whether it’s better to invest in a new roof or get out from under the investment completely, you might want to consider selling. Preventative maintenance and immediate responsiveness to routine repairs will keep your home running smoothly for the most part, but if you have a new emergency to respond to every few weeks, holding onto the home may not be worth the effort or the expense.
You Have an Offer
Perhaps you aren’t actively looking to sell your property, but you have an offer from another investor or a buyer looking for a well-maintained home with tenants already in place. It never hurts to look at the numbers and consider the offer. Sometimes, these opportunities present themselves when we least expect or seek them.
Deciding when to buy and sell investment property depends largely on your present financial situation and your investment goals for the future. If you’d like us to analyze the strength of your investment and make a recommendation that can help you decide whether to sell or hold onto your investment property, we’d be happy to do so. Contact us at New Bridge Management.