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By Evelyn Long
If you’ve invested in real estate, you know the market can be capricious. As it flips back and forth, you may wonder if there will ever be an opportune time to sell your investment property.
Luckily, it’s relatively easy to determine when you should choose to sell your investment property. Whether you have plans to send it on its way soon or you’re just weighing your options, you’d benefit from knowing the most opportune times to sell your property.
The Best Times to Sell Your Property
Unfortunately, you might never encounter a time to sell your rental property that aligns perfectly with all of your goals. An opportunity to sell will rarely check all of the boxes on your list, but it’s still worth it to know you have options when the opportunities arise.
Though they may not be everything you’ve planned for, you still have the possibility to sell your investment property if all looks good or the odds are stacked against you.
1. The Market’s in Your Favor
You’ll make the greatest return on your investment when you sell in a seller’s market. A seller’s market occurs when the sellers have the “upper hand,” as it were. More people are searching to buy than there are houses for sale, which means you might have more people looking at your listing.
You can determine when a seller’s market is active by counting the number of for-sale signs you see. If there are fewer out than usual, you’re likely in the middle of a seller’s market. Another strategy is to note how long listings stay active before they’re sold. If it’s a shorter amount of time, you can bet that people are making deals quickly.
2. You Can’t Afford It
If you’re losing money on your investment property for any reason, whether you can’t keep up with repairs or because it’s challenging to find a renter, you should consider selling it. It’s never good to keep any investment that continuously holds you in the red.
If you haven’t made the profits you expected to make on this property, then you should think about other types of investments or properties and selling what you have.
3. You’re Afraid of a Tax Hit
If you’re afraid of your taxes negatively affecting you, you have a couple of options. If you sell one property and get another within 180 days, you can defer your income taxes. However, you should put that money into a replacement property only.
If you’re worried about this scare happening in years that follow, you might opt to sell everything so you don’t have to worry about the tax consequences of being a landlord.
You can also turn your rental property into your primary residence, if possible. Before doing so, you should be aware that you won’t get the tax deductions you’re used to from when you were renting out the property. You won’t be able to deduct the costs of repairs, for example.
4. You’ve Had a Major Life Change
Sometimes, life takes you off the course you intended or planned out for yourself. Maybe you’ve had a new addition to your family or your job is taking you out of town or state. If something happens that’s beyond your control, you may not be as hands-on as you’d like to be when managing your property.
While you have the option to hire a property manager, you could also consider selling your investment property and retiring with the funds you currently have.
Find the Best Time to Sell for You
Just because everything else is aligning doesn’t mean this time is best for you to sell your investment property. If you don’t feel ready to sell, you shouldn’t feel pressured to do so. Similarly, you shouldn’t feel pressured to hold on to a property if keeping it doesn’t seem to be in your best interests.
The best place and time to buy an investment property is in an area that’s just starting to flourish. With any luck, your rental property is in that area. But even if it isn’t, you can keep it in mind for future investments. Whatever the case, you can rest assured your work in real estate investment is transforming lives for the better.
Author
Evelyn Long is the editor-in-chief of Renovated. Her real estate work has been published by the National Association of REALTORS®, Rental Housing Journal, and other online publications.
