Selling an Investment Property – When Do You Know It’s Time?

It’s possible you’ve been thinking about whether this is a good time to sell your Fort Worth investment property. 

While we can understand the many reasons you may have for wanting to sell, we always encourage investors to hold onto their rental properties for as long as possible. It’s the best way to earn real, sustainable long term wealth with real estate. 

Your investment goals will drive whether it’s time to sell. If you have no immediate need for the capital that your property may hold, we recommend that you avoid selling the property and you continue renting it out. As long as tenants are paying your rent and those rental values are increasing, you are going to make more and more money as time goes by. 

Evaluate and Re-Visit Investment Goals

Take a look at your reasons for investing. Most of the investors we work with buy rental properties for a number of reasons, including:

• Passive income
• Appreciation
• Cash flow
• Tax advantages

There’s usually one overriding reason to invest. 

Perhaps that reason is the need to diversify your investment portfolio. Maybe you’re hoping for positive cash flow. You might be more interested in tax benefits or building equity.  

Whatever your investment goals happen to be, they’ll likely tell you whether it’s a good time to buy or hold your investment. 

Can You Increase Profitability Without Selling?

Another important question to answer is whether you’ve explored all the options you have with an asset. 

Maybe you can increase what your property is earning, which would give you a good reason to hold onto it. A few upgrades can increase your rental value and help you attract and retain better tenants. It will also give you a higher sales value in a year or five years or 10. 

When the maintenance and repairs required on your investment property are adding up faster than the income you’re earning on the property, you might feel like it’s time to sell. Can you prevent those maintenance costs with upgrades? Can you make replacements instead of repairs? 

Consider an Exchange Rather than a Sale

If you absolutely feel the need to get rid of a property, sell it with purpose. 

Instead of selling and walking away with the profits, consider a 1031 exchange. This type of transaction allows you to exchange one property for another. You might be releasing a rental home that isn’t working for you, but you get to stay in the market and enjoy better returns with a different rental home. 

The 1031 exchange can help you grow or revitalize a real estate portfolio. Instead of selling and walking away, sell and reinvest your profits. 

Liquidating a valuable asset is sometimes necessary. However, if you’re a real estate investor looking for smart ways to increase what you earn in the short term and the long term, we always recommend against selling. It’s actually the right time to hold onto your assets. 

Need more information? Please contact us at Trend Property & Management. We’re here to help with all your Fort Worth property management needs. We also serve Keller, Saginaw, Hurst, Weatherford, and the surrounding areas.