Hey, Landlords? 7 Times You Should Sell Your Property

If you’re a landlord, you might own just one property; you might own many more than that.

Is there ever a time when it makes sense for you to sell? It depends on your personal situation, but here are a few pointers.

1. Your property is appreciating a lot more quickly than inflation.

This is fancy terminology for is now known as a “bubble.” If you notice that property values are jumping way too much, grab that money while you can. You can always reinvest it later after prices fall—post bubble.

2. You see long-term demand declining.

This is sort of like the bubble, but instead of prices moving too high, you start noticing little things. Jobs are leaving the area without any to replace them. Schools start cutting programs, lowering the education value and reputation. More businesses are failing. Neighboring houses start having more renters instead of homeowners. Houses aren’t kept as well as they were. Businesses in the nearby area are failing.

You get the idea. None of these things help long-term property values. If you notice disturbing trends, it might be time to make your escape.

3. You need cash more than you need income or growing assets.

While this can apply to anyone, mostly this affects in or nearing retirement. If you want the cash to move to an entirely different area but cannot do it without getting the cash from your property, it might make sense for you to sell it.

Beware that this makes you a bit of a motivated seller—the same person you probably targeted when you bought this place.

4. A suddenly high demand brings an outrageously high offer.

Sometimes, the neighborhood is okay. Property value increases have not been too poorly aligned with inflation. However, someone approaches you with an offer that, you know, is way too high. They may want to buy your property as part of a bigger project (community development block grant, higher land use, etc.).

Everyone should consider selling their property if the price is right. This could be one of those times. It makes sense to research, still, but it may be time to sell.

5. You have a better investment opportunity.

Everything could be going really well with your property. Your property value keeps seeing healthy increases. You have an excellent tenant who respects your property and pays a little above fair market rent, allowing you to make about 15% cash on cash return.

However, you see another opportunity to find a property that will appreciate even more quickly. Maybe this property will somehow make 35% cash on cash return. The problem is that you don’t have the cash available to take advantage of this. It might be time to sell you pretty good property to give you the money for the really good property.

This happens, and jump for joy when it does. More importantly, it might make sense to jump at that opportunity.

6. You can no longer afford to have negative be cash flow.

Maybe you are having trouble getting the same amount of rent that you did in the past, suddenly creating negative cash flow. Perhaps, your property just seems to be disintegrating and needs repairs all of the time, drastically eating away your monthly profits.

If you don’t have the resources available to comfortably whether the temporary storm, you might need to sell your property, before it fully drains you. If you see a long term recovery and can withstand the temporary setback, you should hold onto this property probably. However, if your financial reserves are becoming dangerously low, replenish your reserves and sell your costly property. Usually, you can reinvest later.

7. You realize you made a mistake.

Sometimes, it takes longer to figure than it did to buy your property that you simply made a mistake. At this point, figure if there is some way you can make money from it. If not, figure how much of a loss that you have to take, and remove the stress from your system. This is extremely hard to do.

Ideally, you buy a property with the intention of never selling it. You always will make money, and the property’s value will continue to appreciate without you having to pay capital gains taxes. (You have to pay property taxes, still.)

However, when the time is right, you have to sell. Just like you bought the property when you thought that the time was right. There are many ways to help you do this, and if you seek help of professional investors who specialize with this, more often than not things will turn okay for you.