As an investor, I understand the stress and reward of
having rental properties. They make a great investment, especially for
retirement planning, but they also cost money in maintenance. Often I am asked
by investor clients, “When is it time to sell my rental property?” Here are
some guidelines:
Costs. Being
a real estate investor is like being a business owner and you have to know your
numbers. What is the rental home actually costing you? If the mortgage is
$1,000/month and the renters are paying $1200/month, is that enough to cover
taxes, pool maintenance, landscaping, HOA dues and other expenses? If the
answer is no, it might be time to raise the rent if the market will allow or
sell the home.
Market
Shifts. In the Phoenix market, it
is estimated that we will see a shift from a seller’s market to a buyer’s
market in 2016. That means prices of homes will go down. If your rental
property is paid off or you have a low mortgage compared to current market
value, you may be able to remain profitable even with market shifts. It’s
important to know where you stand. Are you wondering the ROI of your investment
property? Contact me today to receive the Investor ROI Calculator.
Life
Change. Many
investors purchase homes as part of retirement savings. If you’re experiencing
a life change such as retirement or an empty nest, it might be time to cash out
your investment properties in favor of another investment. I recommend checking
with a real estate professional as well as your financial adviser before making
a decision.
Hassle.
Dealing with renters can be exhausting. If you’re looking to simplify life and
have less stress, that could be a sign for you to consider selling your rental
property. Of course, the financial considerations would outweigh hassle; you
could hire a rental company to manage your properties until it was the right
time to sell.
Age
and Condition. As an investor, I
understand the struggle of wanting to keep cash in hand versus making updates
on a rental property. Over time the home will deteriorate and could end up
costing you more money if you don’t keep up with repairs and maintenance each
year. Eventually the kitchen and bathrooms will need updating and you’ve got a
decision to make about whether to renovate or sell the rental property. When planning
for your investment property be sure to keep a line item for normal maintenance.
Real estate is a great
investment in your future and can be something you leave for your children, but
make sure when the time comes it will be a good investment you are handing over
to your children, not a bunch of problems.
The team at Beery Realty
helps investors buy and sell properties and would love to talk to you about
your investment needs.
