Selling an Investment Property – When Do You Know It’s Time?

Your timing when it comes to buying and selling investment property depends on your investment goals. It depends on the market, too, but more so on what you’re trying to achieve with your investment portfolio. For example, when growing by volume is more important to you, you’ll want to hold onto your properties for a little longer unless you’re planning to sell one and buy two through a 1031 exchange. When earning more rent per-unit is part of your overall investment strategy, you’ll want to sell the property that cannot be improved right away. 

Outside of the specifics that drive when exactly it’s a good time for you to sell, we’re looking at some of the best times to sell an investment. Here’s how you know you’re ready to let a rental home go.

Sell When You Can’t Rent

Has the neighborhood changed since you bought the investment property? Maybe tenants are not interested in renting it because the surrounding area has become largely commercial or industrial. Perhaps you’re trying to rent out a unit in a building that has really deteriorated or is attracting difficult neighbors. Traffic and parking could be nightmares. 

Sell the property when you’ve stopped being able to attract and retain great tenants. You are looking to hold the properties that increase the size and strength of your real estate portfolio. 

Sell When the Risks Do Not Outweigh the Rewards

All investments are risky to some extent. Real estate investments, however, should be fairly low-risk, and they should help you hedge against inflation. If your investment property is costing you more money than you have the potential to earn, it may be time to sell it.

Maintenance and repairs are not getting any cheaper. They’re not getting easier, either, with contractors and vendors busier than ever. When the maintenance and repairs required on your Southwest Washington property have become too much to deal with and too expensive, you should sell. 

There might be a minor fix that’s needed from time to time. Routine maintenance is necessary, and if you otherwise find your property to be a good investment, make the repairs and move on. However, if the repairs are frequent and the house requires more than you can possibly provide, it is time to sell. 

Sell to Exchange the Investment for Something Else

When you have an investment property that you’re not thrilled with, sell that property. Instead of walking away with the earnings, re-invest that money into the duplex you want to buy. You’re upgrading your portfolio of investment properties and you’re deferring expensive capital gains taxes on the sale of your investment. 

We typically recommend that you buy and hold property to maximize its value and earning potential. Sometimes, however, selling is the best way to increase your ROI. Contact us at SunWorld Group. We’d be happy to serve as your Southwest Washington investment property resource.