| There are many situations that may lead
you to decide to sell your residential income property.
Some are based on market conditions and the fulfillment
of your investment goals while others may be based on a
change of lifestyle (moving to a job in a new city, lack
of time to devote to the continued well-being of the
property, etc.) Some possible selling motivators
include:
Problems
Factors beyond
your control such as a deteriorating neighborhood or
continual vacancies may be affecting the profitability
of your investment. Or, you may simply decide after a
while that you don't enjoy the process of managing a
property. Some people just don't like having to respond
to tenants concerns and feel a sense of inconvenience.
If you have become uncomfortable it may be time to move
on.
Changes in
Life Situation
You may be at the age when it's
time to retire and just relax with no one to attend to
but yourself. Or you may feel after a few years of
owning an income property that it has served its
purpose. You may now prefer to move on to a
single-family home. If so, the project has been
worthwhile and successful in its time so be proud of you
accomplishment.
Profit
Realization
It may be the right time to cash
out your investment. You may need access to the capital
that is in your property. If your area is in a hot
market and prices are higher than ever you may be in a
good position to sell. Before you do be sure you are
aware of the tax implications of
selling.
Whatever your reasons there are several
factors you should consider to help you understand
exactly when to sell your investment property and how to
achieve the highest sale result:
Your
Neighborhood
Look around your
neighborhood
to get a sense of the state of the income property
market. Are there many houses for sale currently? Have
the "For Sale" signs been posted for a long time? Or are
"Sold" signs going up very shortly after they go on the
market. Pay attention to the activity going on around
you. Timing may often be as important as location.
The
Economy
Identify whether the general economic
conditions are favorable to selling your real estate
investment (look at mortgage rates, economic forecasts,
etc.)
Rental
Market
Identify whether there is still a
strong rental market in your area to make your property
attractive to another investor. How does your property
compare to other rentals in the area? If you're not sure
then go "apartment hunting" to see how you stack up.
Investment
Compare the
overall real estate market in your area to other forms
of investments. Assess the relative merits of purchasing
your property vs. investing elsewhere. Income property
buyers understand different types of investments and
will put their money where it will work best. Put
yourself in the purchaser's shoes. Know how your
property stacks up by comparing it to other investment
vehicles such as stocks, bonds, mutual funds and money
markets. Changes in the stock market may push more
investors toward real estate and the demand for good
properties with high rates of return will increase.
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