Rental properties are great additions to your investment portfolio. They can provide a number of benefits, from additional income to even tax breaks. But what happens if you feel like it might be time to sell it? If you are unsure, here are six solid reasons why you it’s time to let your rental property go.
Negative cash flow
Most people invest in rental properties for a steady stream of additional income. If you are, however, losing instead of earning money, take it as a warning sign. At most, a negative cash flow is indicative of several things, including a drastic change in the market.
In order to determine whether you are getting positive or negative cash flow from the rental property, compare all related expenses to the tax savings. A negative cash flow, in addition to the next item, are sure signs you should sell your rental property as soon as possible.
Pessimistic market outlook
Examining the current market conditions is helpful, but taking a look at the market outlook will provide you more information. Rising rates in rent are another warning sign, but this can be evened out by high demand.
A red flag would be a shrinking population, which can drive prices down. In such situations, attracting renters might prove to be a challenge. If this is the real estate outlook, seriously consider selling your rental property.
Your rental property has significantly appreciated
Contrary to the previous item, the local real estate climate might be in better shape than ever. Additionally, your rental property might have doubled or even tripled in value. You should consider selling your rental property is the profit you will make from the sale is far greater than the rental income you earn every month.
You live far from the property
Living far from your rental property is not a sign that will immediately tell you it is time to sell it. After all, you can hire a property manager to oversee and manage things for you. If, however, you can’t afford to do so and it has become a chore to go all the way to the rental property, it’s time to consider the possibility of selling it.
Should you decide to sell the property because of the proximity issue, consider investing in another rental, but one that is much closer to your location.
Managing a rental property might bring you additional cash flow, but it can also cause a lot of stress. You’ll want to keep your tenants happy, see to maintenance regularly, make sure your property is up to standards, and make sure all your tenants pay on time.
Of course, all the effort can be worth it, but if the stress has taken its toll on you, consider two things: hiring a property manager or selling the property entirely.
It just feels right
You’ve had your fun, you’ve earned enough. Perhaps you simply feel that it’s time to move on to other pursuits. If your heart is no longer fully in the venture, it’s time to find a rental property expert to sell you sell it.
Make the most out of your rental properties
Learn the secrets to success from Ray Amouzandeh of TARGA Residential Brokerage. Get in touch with him today at sfhomez(at)gmail(dotted)com or (415) 494-7009.