Best Time to Sell a Rental Property
While it may seem to be counterproductive as a landlord, there are certain times that may make selling your rental property a lucrative option. However, before entering into such an endeavor, it is important to assess a number of variables in order to determine if selling your rental property is the right decision.
Analyze the Market
Depending on the time of year, season, and the way the rental market is performing can help in your decision to sell your rental property. The folks over and Forbes suggest looking at the current rental market, as well as the local job market, both of which can have an impact on whether or not it makes sense to sell your rental property. If jobs are becoming scarce in your area, it may be a good idea to sell, whereas if the job market is booming, you may want to hold onto your property as there will likely be an influx of prospective tenants looking for a rental home.
Identifying the status of the housing market also includes watching to see if there may be a peak in the near future. According to JWB Real Estate Capital, some indications of a favorable time to sell include aspects associated with a housing market peak such as rising real estate values that are surpassing the income opportunities in the area and a slowing job market. If these areas appear to be favorable to your needs, it may be time to sell your rental property, as a housing market peak might mean a high rate of return through the appreciation of your rental property’s value.
Are You Breaking Even
When it comes to the financial aspect of managing your rental property, identifying the costs versus the rental income can be a helpful way to determine if it would be in your best interest to sell or retain your rental property. Landlordology recommends subtracting your direct costs associated with your rental property from the income you obtain from your tenants. If the costs outweigh the rental income, it may be time to sell or reassess the rental price. Maintaining a negative cash flow over time can leave you in the lurch and on the hook for covering the difference between your mortgage and the rental income provided through your tenant.
Needs versus Wants in the Selling Market
There are times in our life that we may need the benefit of additional income; whether it is due to a change in employment, sending a child to college, or even going back to school yourself, there are a number of factors that could affect your decision to sell your rental property. If you are unable to keep current with your mortgage payment, it may be in your best interest to pursue the process of selling your rental property due to financial need. Likewise, if the property values are stagnant or decreasing in the area, this may signify a time where you should sell, versus the need to sell due to financial constraints.
Overwhelmed?
Managing a rental property can be a rewarding experience, but it can also leave one feeling overwhelmed with the responsibilities that come with being a landlord. It can be particularly distressing when you become friends with your tenants and allow the landlord-tenant relationship crossing the healthy boundaries that are necessary as a landlord (https://www.landlordology.com/sell-rental-property/). Once this boundary has been crossed, it can become uncomfortable to confront your tenant regarding damage or late rent payments.
Conclusion
There are several instances where it would make sense to sell your rental property. Whether it is due to the rental and job market, the costs associated with the upkeep and maintenance of your rental property, or just feeling overwhelmed, selling your rental property can be a viable option. However, if you decide that you would like to keep your rental property but not the emotional exhaustion that can come with being friends with your tenants, consulting a property management company may be the right choice for you and your rental property needs.
References
Forbes. (2018, July 23). When Is It The Right Time To Sell Your Rental Property? Retrieved from https://www.forbes.com/sites/forbesrealestatecouncil/2018/07/23/when-is-it-the-right-time-to-sell-your-rental-property/#4c9d00aa4610
JWB Real Estate Capital. (n.d.). When to Sell a Rental Property. Retrieved from https://www.jwbrealestatecapital.com/when-to-sell-a-rental-property/
Landlordology. (2018, March 22). 3 signs it’s time to sell your investment property. Retrieved from https://www.landlordology.com/3-signs-time-sell-investment-property/
Landlordology. (2018, August 8). When to sell a rental property. Retrieved from https://www.landlordology.com/sell-rental-property/
