When you decide to sell or continue holding an investment property, there aren’t any right or wrong decisions—only consequences. It’s important to be mindful of those consequences and make the right decision for the information you have at the time. Then live with the consequences without regrets.
So you have a nice rental property with multiple income streams. Why would you want to sell it?
A lot of reasons may influence your decision.
- A Better Life for Everyone
- Several of our tenants have fallen in love with their rental and asked us to sell it to them. They get a house they know and love. If they have traditional financing, we get a chunk of cash to reinvest. If we owner-finance, we get a much smaller chunk of cash, but we continue to have passive income without the expenses of renting.
- Profit Taking
- Investing in real estate is like investing in stocks in one important way. If you never sell, you never profit. The exception to this rule is dividend stocks and rental housing, both of which should produce positive cash flow throughout their lives. But selling a cash-flowing rental enables you to capture that appreciation and use it for whatever reason you have.
- Pursuing Other Opportunities
- As with Carol and Russell’s decision to move out of the Abilene market, sometimes you just want to do “something else.” That something else may be to work in market that appreciates faster. Sue Ann and I have also liquidated single-family rentals in anticipation of multi-family investments. (As infrequent as they arise, you have to be in a cash position and ready to pounce when a multi-family opportunity pops up.)
- Taxes And Equity Growth
- A 1031 Exchange may enable you to buy up to three investment properties of equal or greater value to the one you are selling without paying capital gains on the sale— at least not right now. A 1031 Exchange enables you to capture the appreciation from a property and use it to purchase more appreciating properties to build your wealth even faster. Of course, it’s never as simple as it sounds.
- “I’m Just Tired”
- If you’re just too tired of dealing with a rental, call us. We’ll be happy to talk to you about making your life better by taking that problem child off your hands.