With the growing number of individuals and families seeking new residential spaces, ignoring the demand for rental properties is not easy. Being a rental property investor comes with remarkable perks like having a passive income source, greater financial security, property value appreciation, and investment diversification. You even have the option to move back or sell the property if you want to.
Speaking of selling it, rental properties are not an absolute good long-term investment. Like others, it can also cause more harm than good, depending on your situation and the market. As a property investor, you should know when to part ways with your rental space. Listed below are the top signs it’s time to put that rental property on sale.
1. Being a landlord isn’t worth it
Managing a rental property, the tenants, and every day-in-day-out requirements make being a landlord exhausting. For instance, you should be ready to answer calls from your tenants at all times when they have emergencies. If you have been a landlord for too long, you surely have many horror stories about your experience. When it comes to this investment venture, people often have hopes and dreams for being better than others. But things don’t always go the way you want them to. If being a landlord is burning you out, it may be time to sell your rental property. The aggravations may range from tenant problems, natural disasters, fluctuating values, and even maintenance issues.
2. There’s no positive cash flow
This is a simple sign to understand. If your rental property is no longer giving you a positive cash flow, you should consider selling it. Begin reevaluating your situation once you notice that you’re losing money every month. The market rents may have dropped, or the costs of utilities and insurance may have risen. Keep in mind that you become a landlord to make money and not to have an exciting lifestyle. You should be earning more than what you’re spending. Don’t be like most investors who keep their bad assets for a long time, hoping that things will turn around. Let that investment go if you’re not earning the income it should be producing.
3. Maintenance is expensive
If the maintenance and repairs of the building are becoming too hard to bear, it may be time to let it go. Maintenance and repairs are indeed parts of managing a rental property, but you should know how to calculate if they’re getting more expensive than they should be. A rental place must be comfortable and habitable for the people, and its standards should meet the regulations and laws of your area. If you let the repairs add up, they might cause a great loss in profits over time. To better assess the condition of your building, contact a professional contractor to inspect it. If big renovations have to be made, consider selling the property.
4. You can sell it fast
The reason for selling a rental property doesn’t always have to be a negative thing. Sometimes it’s best to sell it because the property ticks all the boxes in the hot market, especially if you need the cash too. It may be time to sell it if the investment property’s type and style are in demand. This also works for location. If the property’s location is becoming more popular and you need the money right away, you can sell your home quickly for cash. If you want to sell for a fairly good price, start finding a buyer or the selling process as early as possible. In most cases, the process can be complex, so you need to be smart and quick.
5. You are retiring soon
If you’re planning to retire soon, it may be a great time to start collecting your investments as well. You might be better off selling a negatively geared property than keeping it for years while expenses are too high. After all, you deserve a retirement with fewer worries. On the other hand, if it’s a property that still offers a positive cash flow, it might be smart to keep it for more years. However, be sure you have a plan as to when you need to sell it. Consider your financial goals when making a decision.
Keeping a rental property that’s costing more money than the amount it generates can be huge baggage to your finances. Take these tips into account when deciding on selling your property. If you’re still unsure whether to proceed, don’t hesitate to contact a financial advisor or real estate expert for further guidance.