As a Hanover investment property owner, you may waste plenty of time acquiring and managing your investment property. Any great rental property owner anticipates the time will come when they will need to sell the property. While it may be years in the future or sooner than you thought, it can be hard to pinpoint when that perfect time has come.
As your life circumstances develop, you may need to change 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 applying a few basic guidelines, you can be more prepared when the time is right to sell your rental property.
Your Property Values Go Up
One key figure you should examine 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 see if this is the scenario, you would need to calculate your return on equity (divide your annual profit in rent by your anticipated equity/cash out at sale). If the overall sum 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 may work this way, but then earnings may decline over time. If you are holding a property that has not been generating an income for some period, you may feel like selling.
Before you believe that your property isn’t profitable, you need to speak with our Hanover property managers and ask 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
Usually, the reason you think about selling has nothing to do with the property itself but with other opportunities that occur in your life. Or possibly you are stressed from owning rental homes and want to branch out to various types of investing. Either way, when opportunities arise, it may mean the time has come to sell your rental. However, if you want to do so, watch out to determine your tax liability from the sale and consider the most advantageous timing.
You’re Ready to Retire
Another reason numerous rental property owners end up selling is to finalize retirement plans – even if you are retiring from rental property ownership, not just your career as an investor. As you clearly understand, owning rental real estate is the perfect option to save up for retirement. Investors of all sizes typically include 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 advantageous to sell.
You Need Money
Lastly, one of the only guarantees about life is that everything can and does change. If your life changes in such a way that you need money, whether to fund a college education, pay medical expenses, or any other reason. Due to this, it may be necessary to sell your rental property. Even though it may seem like you need to sell quickly, be certain that the amount you can get for the property makes sense – primarily if you could potentially finance your important expenses by another means, like an education loan. You may come to regret underselling your property because you are in a hurry for cash.
If you’re still uncertain about whether the time is right to sell, it may be better to ask for some expert advice. At Real Property Management Beacon, we educate 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.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.