As a Norfolk investment property owner, you may commit a significant amount of time acquiring and managing your investment property. Any great rental property owner understands that the time will come when they must sell the property. While it may be years in the future or sooner than you expect, it might be difficult to tell when the proper time has come.
As your life circumstances change, you may need to change 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 obeying a few guidelines, you can be well prepared when the time is right to sell your rental property.
Your Property Values Go Up
One key figure to consider is your property’s long-term rental income potential compared to its current value at sale. This is because 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 determine if this is the case, you would need to calculate your return on equity (divide your annual profit in rent by your anticipated equity/cash out at sale). If the result 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 in this manner, but then earnings may decline over time. If you are keeping a property that hasn’t been making an income for a while, you may feel like selling.
Before you believe that your property isn’t profitable, you should speak with our Norfolk property managers and ask 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
Sometimes 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’re weary of owning rental homes and want to diversify into different types of investing. After everything, when opportunities call, it may mean the time has come to sell your rental. Yet, if you choose to do so, be mindful to determine your tax liability from the sale and consider the most advantageous timing.
You’re Ready to Retire
Another purpose why rental property owners decide to sell is to finalize retirement plans – even if you are retiring from rental property ownership, not necessarily your career as an investor. As you are aware, owning rental real estate is an effective technique to save up for retirement. Investors of all sizes often include at least some property holdings in their retirement planning. If you are getting ready to retire and need your equity to fund your retirement plans, now is the time to sell.
You Need Money
At last, one of the only guarantees about life is that things can and do change. Assume your life changes in such a way that you need money, whether to fund a college education, pay medical expenses, or any of a dozen other issues. In that case, it may be necessary to sell your rental property. Even though it may seem like you need to sell quickly, bear in mind that the amount you can get for the property makes sense – notably if you can likely pay for your urgent expenses in another manner, such as an education loan. You may come to regret underselling your property because you are in a rush for cash.
If you’re still confused about whether the time is right to sell, it may be time to ask for some expert advice. At Real Property Management Hampton Roads, 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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