Sometimes investments just don’t work out. Sure, a great property is often the key to unlocking real investment potential, but other times it’s just better to pull the plug.
So how do you know if you should sell? If you find yourself in one of these scenarios, it’s probably time to call a listing agent and move on.
1. Negative Cash Flow
So you found a great property, but you bought too high. Now you can’t collect enough rent to offset the mortgage. If you paid too much for a property compared to what you collect in rent, a domino effect of problems ensues.
Related: 5 Reasons Your Rental Property Has A Negative Cash Flow
When you’re in the hole, you tend to skimp on repairs, which turns away tenants. Plus, the financial stress puts you in a bothered state. Your mental track loops, “If rent doesn’t come, I can’t pay the mortgage. If a repair comes up, I can’t afford it.” Sure, it may be a good house, but with this pattern you won’t be able to keep good tenants.
2. Constant Repairs
While age brings character to a property, it also brings a long list of repairs. Sometimes, old houses break the bank in repair expenses. If you have a house that constantly needs major repairs, it’s often better to find a newer house to invest in.
3. Neighborhood Crime
If you have a property in a location subject to theft and vandalism, you should leverage your current rental for a better opportunity. In some places, if a house is left vacant for even 24 hours, things like A/C units, copper, or appliances go missing. At that point, it’s time to relocate.
Related: How to Choose the Best Location for Your Dallas-Fort Worth Rental Property
Your Next Step
If it’s time to sell, you’ll want to plan for your next purchase. By figuring out where to buy next, you can take advantage of the 1031 exchange. With a 1031 exchange, you don’t get taxed on the profit if you reinvest in a similar asset.
That is where LEAP Property Management comes in. We help our investors with this all the time. We work with our clients to sell a problem property and get into a better one – one in a good location with a solid cash flow.
Since we’re responsible for keeping your property lucrative, we’ll get you a property worth your money. If you paid too much for a house in the past, it’s probably because the real estate agent inflated rental comps to justify the sales price. At LEAP, we give you a realistic idea of what a property will lease for before you buy. That way, you don’t fall into the same pitfalls again.
Because we help you both invest in and manage your property, we’ll set you up for a good buy that brings long-term profit. Need help selling an investment property? Give us a call at 888.657.3033.