As a real estate investor, you likely know there are many strategies for obtaining wealth. One of the most popular in the real estate world is the buy and hold strategy. However, there are some reasons you really should consider selling your rental property instead of holding onto it.
The housing crisis of 2007 allowed those with the capital in hand to purchase a variety of homes for record low value. A few years later in 2011, many of those buy and hold investors sold their investments for three times what they bought them for. This is a situation where it pays to sell your rental property. While you’re relying on the tenant to bring you consistent income, it doesn’t hurt to turn a big profit if the market prices shoot up. You should compare how long it will take for the rental checks to add up to the profit you could make on the sale of a home. This will give you a good idea if selling is in your best interests.
Overtime rental rates in your investment area may decline. You may end up having more maintenance issues with the property than you planned. There are a ton of various things that can go wrong for the average real estate investor. This is why you’re told in every book and course out there to be generous with the amount you withhold for vacancies and maintenance costs. Unfortunately, in some situations, you may not be able to keep your cash flow positive. Once your cash flow hits the negative mark, it’s time to sell the property. There’s no reason to keep an investment that is draining your funds.
As you grow and develop as a real estate investor, it’s common to invest in larger properties. Those initial few properties that got you started in the business may be dragging down your time and money. In fact, you may have honed your skills on picking properties that are way more profitable than the original ones that got you started. In this case, it may be time to sell those first properties on a platform like https://www.amerinotexchange.com/sell-mortgage-note/. Real estate investing is all about having your planned strategy implemented. If some of your rental units just don’t fit into your plan anymore, then it’s time to get rid of them.
Another reason you should consider selling your investment property is if there is a massive negative change in the geographical area. For example, if a factory that employed a large portion of the town has recently been shut down, it’s likely there aren’t going to be many jobs left. When there is a decrease of jobs, individuals will start to move out of the area. This can mean no renters for your rental units. If you notice a negative change in your investment area, it’s best to get out from underneath it before every other investor realizes the situation and tries to sell.
As a real estate investor, you need to be keeping a close eye on your investments. While the buy and hold strategy is a good one when performed correctly, it does have its limitations. For all the reasons above, you should consider getting out from underneath your investment.