As a San Antonio investment property owner, you may spend plenty of effort acquiring and managing your investment property. Every excellent rental property owner understands the time will come when they will need to sell the property. Although it may be years in the future or sooner than you assume, determining when that exact time has come might be difficult.
As your life circumstances change, you may 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 implementing a couple of fundamental guidelines, you can be fully prepared when the time is right to sell your rental property.
Your Property Values Go Up
One key figure to think about is your property’s long-term rental income potential compared to its current value at sale. The reason is that, 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 find out if this is the case, you will need to calculate your return on equity (divide your annual profit in rent by your anticipated equity/cash out at sale). If the resulting amount 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. Others may begin that way, but then earnings may decline over time. If you are holding a property that has not been providing an income for quite some time, you may feel like selling.
Before declaring that your property isn’t profitable, speak with our San Antonio 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
Typically, the reason you think about selling has nothing to do with the property itself but with other opportunities that emerge in your life. Or maybe you are dissatisfied with owning rental homes and want to branch out into other types of investing. In any case, when opportunities arise, it may indicate the time has come to sell your rental. However, if you opt to do so, be careful to determine your tax liability from the sale and consider the most advantageous timing.
You’re Ready to Retire
One more reason many rental property owners choose to sell is to finalize retirement plans – even if you are retiring from rental property ownership, not just your career as an investor. As you are already informed, owning rental real estate is a wonderful way to save up for retirement. Investors of all sizes often include at least some property holdings in their retirement planning. If you are ready to retire and need your equity to fund your retirement plans, this is an excellent opportunity to sell.
You Need Money
Finally, one of the few guarantees about life is that things can and do change. If your life changes in such a way where you really need money, whether to fund a college education, pay medical expenses, or any of a dozen other things. For this reason, it may be imperative to sell your rental property. Although it may seem like you need to sell straight away, take into consideration that the amount you can get for the property makes sense – mainly if you can afford to compensate for your urgent expenses in some other way, like an education loan. You may come to 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 is advisable to ask for some expert advice. At Real Property Management Campanas, we assist 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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