Should you Sell Your Property Now?

Your choice to buy rental income property was an excellent one. Although the stock market has performed very well, and continues strong, the housing market and rental properties were a solid choice.

Check out the US rental housing market report

Yet with the real estate market nearing a peak of sorts, it may be time for you to sell your property if your returns are slipping. Your buy and hold strategy, even during your property accumulation phase may not hold water anymore. It’s time to weigh the factors to make the right decision.

For any homeowner, change happens and there’s a right time to sell.

Buy and hold forever for investors? When profit and capital appreciation returns look negative, giving up on the property is a wise investors decision.

Which Are the Best Days To Sell?

When’s the best time to sell your property?  It seems May 29th, May 31st, June 21nd and June 28th are the best days of the year to sell. A report from Attom Data Solutions based on their analysis, discovered that June 28th is the best day where sellers received the biggest premium (9.1%) on the selling price. Overall, the study found the Month of May provides the best return on sale (5.9%). Overall, selling during the best month brought a 20% increase over the poorest month.

Screen Capture Courtesy of AttomData.com

There’s lots of reasons why selling your investment property this summer season makes really good sense, and you’ll find a lot of them below. The key reason is that you should unload poor performing properties and begin searching for better ones.

Modern, newer luxury condos in an improving neighborhood in a growth constrained city guarantees long term rental income.

And with it now being the high selling season of May, June and July, you need to think and act quick.

A report from Zillow:  those who sell in late April, early June earn an extra premium of $3000 to $14,000.

You, in the Property Liquidation Phase

Is it time to rethink and enter the “liquidation phase”, and ready yourself for the “enlightened property buying phase”? Your next purchases are bound to perform better than your current ones are.

And maybe it’s time to diversify your full asset portfolio and sink some funds into another form of passive income. Who knows what sector will get hit hard in the years ahead? Smart investors watch for risk and opportunity.

Property and Rent Prices Peaking

If you read the US rental market report, you may conclude that property prices won’t rise much more. And your capital gains could be slim from here on in with a bit of a slowdown within 5 years.

The economy looks good, but let’s hope you’re not underwater at some point.

You may not be able to recover your increased repair or maintenance costs, HOA fees, property management fees, mortgage payments, or property taxes. You’ll need to be more efficient from here on in. Is your cash flow getting a little spotty too?

Screenshot courtesy of financialpost.com

Bad Cities, Good Cities

Some states and cities may be headed for a fall while others are offering huge price gains and rental income. Are your locations looking good? Cities such as Toronto, Canada have suffered fast falling home prices.  The political and market conditions don’t look good for rising home prices or rising rents in Toronto.

And many other cities may follow Toronto’s lead which might be described as too little too late. The regulations actually strangle the resolution of a low supply market.

And with rent controls being re-enacted in the province of Ontario as an example, property managers and landlords are limited to 1.8% increases in 2018. Property investors there are not happy. With inflation increasing, property values flat or falling, and financing costs increasing, it’s making poor performing properties a burden. Selling now might be the smartest choice.

Bad Locations and Old Buildings

If the neighborhood and city your property is located within is not what it used to be, that’s another selling signal. What’s your gut feeling telling you about the neighborhood and state of your rental house, condo or apartment building? Big bills coming? Are you finding it hard to rent your unit at the prices you want?

Are your tenants late paying and being a pain in the neck? Is eviction an impossibility? What’s your gut feeling telling you about their potential as your cash flow source?

And if the style, layout, amenities of your condo building suck, will the picture get much better? Has the property management company or building owner talked about rehabing or freshening it up? If new appliances and a quick refresh can’t suffice to make it work, it’s a dark cloud on your ROI horizon.

What Do your Income or Balance Sheets Tell You?

If your rental property management software income statements or owner reports are telling you that your profit is heading downward toward break even, it may be time to sell your current properties. Poor cash flow is one thing and risk is another. Hanging onto a depreciating asset may not be advisable.

If your financing situation is tight you may want to sell a property to pay off the mortgage on another, as you’re looking at renegotiating at higher interest rates.

With the recent tax changes created by President Trump, baby boomers may want to unload troublesome assets to pass on inheritance to their kids and enjoy a tax break. That’s a big perk in the state of Florida.

When Risk Free Vehicles Perform Better

If numbers are what matter to you, compare your cap rate to a risk free investment vehicle such as a treasury bond. If it’s that low, it might be time to sell.

Once you let go of, and sell your losing property, you’re ready to invest in another asset, or to begin the search for a better replacement income property.

It’s A Learning Experience – Time Let Go of Losers

It’s pretty well understood that your first few properties won’t be winners. Novices have to learn the ropes and you’ve done all you can with that particular property. Now you know how choosing the right property is so vital to long term sustained cash flow and capital appreciation.

The whole point of moving to another phase of your property investing career is grow your property investment returns and protect your wealth.

If you can make a profit on the sale, great, but money isn’t made in selling houses and apartments. It’s in how you buy them – the city, neighborhood, price, condition, tax rates, date of purchase, and type of property. Buy low and buy smart, screen tenants well, and set the right rent price.

Good luck managing your rental property investment portfolio. If it’s large, or enterprise level, make sure you have the best property management software. It’s how you optimize your ROI.

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