As a Wayzata investment property owner, you can spend a bunch of time acquiring and managing your investment property. Any outstanding rental property owner realizes the time will come when they should sell the property. It can be difficult to tell when that perfect time has arrived, whether it may be years in the future or sooner than you assume.
As your life circumstances change, you might need to adjust your ownership status and strategy to make room for new opportunities or prepare for a new stage of life. The good news is that by following a couple of easy guidelines, you can be better prepared when the time is right to sell your rental property.
Your Property Values Go Up
One key figure to consider is your property’s long-term rental income potential compared to its current value at sale. This is because as markets heat up, you may find that you could make more in the short term from selling a rental property than you would generate through rental income in the long term.
To recognize if this is the situation, you would have to calculate your return on equity (divide your annual profit in rent by your anticipated equity/cash out at sale). If the output is small or negative, it might be time to sell and invest that money back into your real estate portfolio.
Your Property Isn’t Profitable
Not all rental properties are profitable in the long term. Some might start that way, but then earnings may decline over time. If you are keeping a property that has not been yielding an income for some period, you may feel like selling.
Before you consider that your property isn’t profitable, you need to talk with our Wayzata property managers and inquire about a rental assessment. If you’re not getting market value for your current property, you could be leaving dollars at the door.
You Want to Invest in Other Ways
Sometimes the reason you think about selling has nothing to do with the property itself but with other opportunities that arise in your life. Or perhaps you are tired of owning rental homes and want to branch out into different types of investing. Either way, when opportunities call, it may mean the time has come to sell your rental. However, if you decide to do so, be careful to determine your tax liability from the sale and consider the most advantageous timing.
You’re Ready to Retire
Another reason why some rental property owners choose to sell is to settle retirement plans – even if you are retiring from rental property ownership, not your whole career as an investor. As you are well aware, owning rental real estate is an incredible way to save up for retirement. Investors of all sizes typically involve at least some property holdings in their retirement planning. If you are prepared to retire and need your equity to fund your retirement plans, the time may be right to sell.
You Need Money
At last, one of the only guarantees about life is that situations can and do change. Assume your life changes in such a way that you need money, whether to fund a college education, pay medical expenses, or any of a few other reasons. In that case, it might be necessary to sell your rental property. Even if it may feel like you need to sell right away, keep in mind that the amount you can get for the property makes sense – particularly if you could possibly pay for your emergency expenses in another manner, like an education loan. You may soon regret underselling your property because you are in a rush for cash.
If you’re still wondering whether the time is right to sell, it may be time to ask for some expert advice. At Real Property Management Viking, we guide rental property owners on all aspects of their investment properties, from finding off-market properties to buy to devising property management strategies that are best for you. To learn more about what we offer, contact us online.
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