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.