When to sell a rental property?

Real Estate Sales Representative with Castles Unlimited®

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.


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Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

Good topic for discussion,  .  Too many think it is easy to own rental property, and quite frankly, have NO clue in putting the right things in place... i.e.:  property managment company, tax accountant / attorney, proper LLCs .... etc.

Mar 06, 2020 10:31 AM #1
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

All good points you are making here.  I know it is not for everyone, they do not like the phone calls at 2 in the morning most the times.


Mar 06, 2020 10:49 AM #2
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

James Lowenstern this is good advice.  Thank you for sharing it with us.

Mar 06, 2020 11:04 AM #3
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James Lowenstern

Castles Unlimited. Newton MA Real Estate
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