“You Gotta Know When to Hold ‘Em; Know When to Fold ‘Em…
…know when to walk away; know when to run.” While singing along with this old Kenny Rogers classic I thought to myself, this pretty much sums up the philosophy behind investing in rental properties. You don’t just jump in the game and hope for the best. Investing requires knowing your properties, knowing the market, and knowing the neighborhoods. This is a poker game you don’t want to lose, and you won’t if you do your homework.
We’ve talked several times about getting into the market, but how do you know it’s time to walk away? The answer is simple. When the property is no longer making you money, it’s time to sell. This can be especially tough if the property has sentimental value to you. You’ve got to remember, it’s all about increasing your net worth, not collecting liabilities. You’d be surprised how many investors don’t even realize their properties are losing money. Here are some points to remember when deciding to hold ‘em or walk away.
Has your rental used up its depreciation tax deduction? Your accountant will know this. When the investment can no longer be depreciated (which will happen after a certain number of years), it’s time to sell and purchase another rental.
Have you had your eye on a pretty little apartment building across town? Consider selling your old property and rolling the profit over to the new investment to avoid capital gains taxes and increase wealth.
Do you suspect your property is losing money? Ask your real estate professional (that’s us!) or accountant to perform a cost to income analysis. This will tell you what you need to know if you are thinking about making a change.
The real estate market is constantly fluctuating. It is nearly impossible for someone who is not in real estate management to keep up with it all. But, hey, that’s what we do. Here at Martin Presence, we can help you keep an eye on the bottom line. When it’s time to make a change, we will be here for you to make buying and selling properties a breeze. Let the experts help you play your hand to win.