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When should you sell your rental property?
Wondering whether it’s the right time to sell your investment property? As a seller, you need to invest the right way to maximize your profit. One of the ways you can ensure that you are getting the best is by selling your rental property when the time is right. But when is the time, right?
The right time may be hard to predict as many factors come into play, including market factors. Below, we help you understand some of the circumstances under which you can sell your house.
Problems with tenants damaging your home or costly repairs
Owning a property can be costly in terms of maintenance. You have to ensure that the property remains in good conditions so you can attract the right tenants. Even if you do your due diligence and get what you think is a great tenant, sometimes when you least expect an expensive repair can come up and put a dent in your finances. Whether that’s something like your furnace breaking or the tenant actually damaging the home, if you find yourself struggling with costly maintenance and repair projects, it may be time to sell your property.
Tired of making emergency house visits
Being a landlord means that you will get emergency calls, sometimes during business hours and sometimes in the middle of the night. While there is nothing wrong with attending to the needs of your tenants or property, sometimes a property may cause you more trouble than it’s worth, leading to exhaustion and nothing but bad experiences. Whether the tenants are causing you a headache or your part-time landlord job has transitioned into a full-time role that you cannot handle, maybe it’s time to sell your property if it’s becoming too regular of an occurrence that you’re making emergency house visits.
Tenant Not Paying or Late on Rent Consistently
Sometimes, tenants have genuine excuses for not paying their rent on time. However, when tenants are continuously late with their rent payments or not paying their rent at all, you need to re-evaluate your situation to see if the renters or the property is worth keeping. Missed or late payments in the midst of other responsibilities such as utilities, insurance and taxes may become unnecessarily stressful and evictions, or worse – squatters, can rack up thousands in legal fees just to get someone out of your property. The good news is you can still sell your rental property, even with the tenant still in the home. If you’re done dealing with non-paying or consistent late tenants, now might be a good time to sell a property that no longer serves you.
Having a Hard Time Finding Good Renters
Apart from tenants not paying rent, it can be difficult to find good ones who will live in and maintain your property in a fashion that you’d like. Tenants may be dirty, refuse to sweep or dust, they won’t clean the bathrooms, and some may even just stack trash in the kitchen instead of filling up a garbage bag and taking it outside. If you’ve been a landlord long enough, you’ve probably come across some renters where you just can’t understand how they would live that way. Those problems then become yours when they move out and you have to get the home back into a livable condition. Yuck! Screening your tenants is may be the most important part of being a landlord but finding the right tenants has become a difficult chore. Endless calls, walkthroughs and other requests may cause you quite the hassle but at some point, you have to get a renter in there or the property is just costing you money. If you’re done with screening tenants and dealing with turnover, it might be time to sell your property rather than keep it.
Need help selling your investment property?
Give our team a call anytime, one of our co-founders is happy to discuss options for your home.
Utility, taxes, insurance, and costs have risen.
Owning a home or rental property comes with all kinds of costs that change fairly frequently. Property tax go up, homeowner’s and private insurances increase, homeowner’s association fees, utilities and other costs are constantly on the rise and can become a thorn in you side as the property owner. To maintain cashflow positive, often you have to raise rents and that isn’t always the easiest conversation either. If this is your property and it’s no longer making you money, selling it might be the right choice.
Other life events have happened and you need the money
Some life changes may require you to make adjustments and possibly sell your property. Whether it is a job transfer, a change in your lifestyle, an injury and medical bills, or you have different priorities and interests, you can always sell your property and move on. The money you gain from the sale can be used to jump-start your new life.
Need the money for other investments / opportunities / 1031 exchange
Maybe the best reason to sell your rental properties is to avoid taxes. Uncle Sam wants to get every penny he can, but real estate investors can take advantage of opportunity by reinvesting their gains in other properties. As a property owner, you can take up the services of a tax advisor or lawyer, put the money from the sale in an escrow account and only use it when you are ready to purchase a new property. There are many criteria that need fulfilled for a proper 1031 exchange, two of which are the price of the new property and you only have a limited timeframe after the previous sale to make the new purchase. But if your idea is to rollover your funds and invest into something new, selling your current property is a great way to defer taxes and make you more money.