Back To Blog

When to sell a rental property?


Rental properties come in handy when you are interested in bringing in extra income to your household, however, homeowners often wonder when is the right time to sell their rental properties. Therefore, we discuss in this post legit reasons to do so.


1) Your business is not doing well. 


The only way to define if your business is working well is to check the cash flow, you must have a positive cash flow every month, otherwise, you are losing money. Remember, you define this by subtracting income related to rent minus expenses related to the property. If the numbers are unfavorable, it is time to consider an increase in rent, if that is no longer possible, then it could be the right time to sell your rental property.


2) Managing a rental property isn't for you.


Renting property seems like an easy job, however, it can be demanding since it involves for renters to be firm and strict with tenants, have constant visits to check the condition of the property, and have the monetary capacity to manage repairs, and upgrades, if needed.

Besides having a steady hand, it is important to remember that tenants aren't supposed to become your friends, keep relations in a distant friendly way to avoid future problems. If you think your personality isn't the appropriate one, well it would be better to leave the stressing job and sell the property.


3) You’re moving...


If you are managing rental properties, you should know that it is easier when you live nearby, working from a distance is not as simple since an emergency can occur at any time and you must be ready to take action on a repair and being in another state or country can difficult the process big time. That is why we consider a move as a reason to sell a rental property. The pro is that you can probably buy a new one near your new location. Another option can be hiring a property manager, but this will represent a new cost, and could you afford it? 


4) Exchanging it for another property.


What if the rental property you own needs some repairs and will require a huge investment? You might want to sell the property rather than invest a lot of money on it. Trading it for a newer and upgraded rental residence is not a bad idea at all. If you are up for it consider doing a 1031 exchange to postpone paying tax on any income gain your receive through the sale.