Holding into an investment property wondering whether you should sell it or keep it for another few years? Knowing the right time to sell can make a big difference to your long-term returns.
Selling too soon can be detrimental, causing you to miss out on future gains, but waiting too long could leave you tied to a property that’s no longer profitable.
Here are some key factors to help you decide when it’s time to move on.
Your Property Has Reached Its Peak Value
One clear sign to sell your investment property is when it has appreciated as much as possible given the local market.
If you’ve tracked property prices in the area and see that growth has slowed, or it’s looking like new developments aren’t likely, it might be time to cash in. In this case, you don’t want to wait too long, or you’ll be holding onto a property that could plateau or even lose value.
The Rental Income No Longer Covers Costs
The whole purpose of owning an investment property is to generate positive cash flow. If you’re beginning to deal with rising maintenance expenses or your mortgage payments are going up, you might decide that selling is the best option.
The last thing you want is to rent out a property that consistently runs at a loss, as this will drain your finances over time.
Market Conditions Are in Your Favor
If the seller’s market is strong, this can provide a good opportunity for you to sell.
How do you know when the seller’s market will work in your favor? A good sign to look out for is high demand for property in your area but only a small pool of properties available, as people are more likely to enter bidding wars, and properties sell at higher prices.
Selling in these conditions can maximize your profits, so you have more capital for your future investments. Keep an eye on investment articles to stay ahead of the curve.
You Need to Rebalance Your Portfolio
Sometimes, you might decide to sell an investment property not because of the property itself, but because of your overall strategy.
If you’ve become too dependent on one type of asset or one market, you can diversify your portfolio by selling. For example, if you currently own one too many single-family homes, you could sell one and use the profits to invest in a multi-unit property to spread out your risk.
The Workload Has Become Too Much
Finally, you might decide to sell an investment property if the workload has become significantly higher.
Some properties, especially older ones, are more prone to issues with leaks, electrical faults, heating problems, and other age-related issues.
If you’re overwhelmed by the frequency of repairs or you’re dealing with tenants who have become demanding or difficult, you might be better off selling and reinvesting in something less demanding, like a fully managed real estate fund.
Final Thoughts
Not every situation calls for you to sell your property. If you’re consistently bringing in a strong cash flow or the property is in an area with growing demand, it might be better to hold on to it for now.
If you’re not sure, reach out to a financial advisor. They can help you assess your current financial situation and make a plan for long-term success.
Alexander Martin
Related posts
Stay connected
Today's pick
- The Hidden Costs of an Inefficient Air ConditionerAn inefficient air conditioning system can reduce worker performance by up to 6%. The hidden costs of poor AC performance go way beyond the reach and influence of higher energy bills. These costs create a cascade of unexpected expenses that property owners often overlook. The... The post The Hidden Costs of an Inefficient Air Conditioner […]