As a St. Louis investment property owner, you may consume a lot of energy acquiring and managing your investment property. Every respectable rental property owner recognizes the time will come when they will need to sell the property. While it could be years in the future or sooner than you imagine, it tends to be a challenge to determine when that perfect time has arrived.
As your life circumstances change, you might have 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 employing a handful of basic guidelines, you can be better prepared when the time is right to sell your rental property.
Your Property Values Go Up
One key figure you should analyze is your property’s long-term rental income potential compared to its current value at sale. This is due to the fact that 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 find out if this is the case, you would have to calculate your return on equity (divide your annual profit in rent by your anticipated equity/cash out at sale). If the total figure 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 might begin that way, but then earnings may decline over time. If you have a property that has not been producing an income for quite a while, you may feel like selling.
Before you say that your property isn’t profitable, you should speak with our St. Louis 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’ve had enough of owning rental homes and want to expand into numerous types of investing. Either way, when opportunities present themselves, it may be the time has come to sell your rental. However, if you want to do so, it is important to determine your tax liability from the sale and consider the most advantageous timing.
You’re Ready to Retire
Another reason several rental property owners choose to sell is to accomplish retirement plans – even if you are retiring from rental property ownership, not necessarily your career as an investor. As you probably know, owning rental real estate is a viable approach to save up for retirement. Investors of all sizes usually include at least some property holdings in their retirement planning. If you are prepared to retire and need your equity to fund your retirement plans, the time may be right to sell.
You Need Money
In the end, one of the only guarantees about life is that events can and do change. Assume your life changes in such a way that you need money, either to fund a college education, pay medical expenses, or any of a wide variety of reasons. If that is the case, it may be desirable to sell your rental property. Even though it may seem like you need to sell promptly, bear in mind that the amount you can get for the property makes sense – primarily if you could pay for your essential expenses in another way, like an education loan. You may probably regret underselling your property because you are in a hurry for cash.
If you’re still not convinced whether the time is right to sell, it may be time to ask for some expert advice. At Real Property Management Specialist, we guide 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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