Should you sell your rental property?
Who doesn’t appreciate the passive income a rental property provides? Every month, like clockwork, you receive a payment from your tenant. It can serve you very well right through retirement. However, there are a number of other considerations that may encourage you to sell your rental property. We’ve provided a list of some key reasons to weigh up if you should sell, or continue to rent.
Are you good at your job?
Take a long hard look at your performance as landlord and be honest with yourself. Are you too emotionally invested in the property or with the tenants? Are you letting rent payments slip, avoiding regular inspections to avoid conflict? This is not benefiting your investment or your bank account. If you allow your property to fall into disrepair, its value will decrease as will the quality of tenant you are trying to attract. In a case like this, you may want to hire a professional property manager or simply list the place and invest your money elsewhere.
You Want to Cash in
You have a college-bound child or your retired parents need some help. Life happens and sometimes your money is needed elsewhere or likely to earn better elsewhere. Though there are always risks to playing the market, if you’ve owned a rental property for 5+ years, the probability you’ll profit is good. And, if you’ve been a diligent landlord, adequately maintaining the property and making necessary upgrades, you will likely earn even more in the sale.
Part of the Plan
You may have bought the property knowing a certain event would trigger a sale. These might be exactly the scenarios discussed previously – college bound child or retirement costs. In which case, the sale is part of your initial plan and a thoughtful, warranted decision.
The Property isn’t Performing Well
Obviously, if you are losing money, you may want to sell. Cash flow is the best way to determine the viability of your rental property. If you are finding it hard to attract and keep tenants and are still saddled with mortgage payments and other expenses, selling makes perfect sense. Alternatively, do an analysis of comparable properties to determine whether you are charging the right rent. It is possible that you have underpriced your property and might fare better, from a profitability standpoint, charging more rent.
In addition, consider using the liv.rent app to find qualified tenants, book viewings, sign contracts and generally, manage your property(ies) better.
You want to try your hand managing a different property
You may have bought an inexpensive rental to get into the market but you now would like to manage a better property that warrants higher rents. Alternatively, perhaps your rental needs some expensive repairs like a new roof or foundation and you are reluctant to sink any more money into this investment. This might be the perfect time to sell and trade up.
Is the Time Right For You?
Remember, you don’t have to sell, ever. After all, owning a rental property is often a key part of any passive income stream portfolio. However, if you decide to, make sure your decision is well-informed, objective, and fundamentally in your best interest financially and/or emotionally. You will always feel better about your decision knowing the reasons were sound.