Property Expert Nick Statman shares his best advices on Selling Properties.
Property investment is all about timing. In order to be successful, you must learn how to buy at the right time, invest at the right time, and sell at the right time. This is a skill that for some property investors can take years to master. There is a fine line between analysis, paralysis and jumping into action. For most, learning how to properly time your investment strategy happens through trial and error. If you own an investment property consider a few of these situations that may be a sign that it’s time to sell.
Something Significant Has Just Happened In Your Life
Investing in property takes time. It requires careful planning and research before you buy the property, then continual maintenance and repairs on the property during the time in which you own it. It requires staying on top of market trends and property laws. If something significant happens in your life that is going to take your time and focus away from your investments, such as the birth of a baby or a death in the family, it may be time to sell the property. Selling your investment property can help you pay for unexpected expenses, and can free up a lot of your time so you can focus on this important milestone.
If Your Portfolio Begins To Diversify
According to an article done by Financial Samurai, investments can be ranked on a scale of 1 to 10, based on how much activity it requires to maintain them. Investments that rank at a ten are considered the best because they provide the highest return, the least risk, and require the least amount of activity. Your day job ranks at a 1 because it requires an extreme amount of focus, commitment, and activity. Property investing comes in at a 6. According to this ranking system, property investing requires a lot less activity than your typical day job, which is why it is such a popular way to earn passive income.
But if you begin to diversify your portfolio and start earning income from investments that rank closer to 10, such as private equity or dividend investing, property investing begins to look like a lot more work. If you’ve worked hard to diversify your portfolio, you may consider selling your investment property to earn more money while doing less work.
Cash Flow is Negative
The whole goal of property investing is to generate a passive stream of income. But if you are struggling to make money on the investment, it may be time to sell. If you find that you are putting more money into your investment property than you are getting out of it, something’s not right. Some reasons that your investment property might be experiencing a negative cash flow is that you paid way too much for it when you bought it, you haven’t perfected the right rental strategy for your particular area, the rental value is low, or you’re spending too much (or too little) on maintenance and upkeep. Having one or two months where the cash flow is in the negative does not necessarily mean you have to sell right away. But if you are consistently losing money, it may be in your best financial interest to sell.
You’re Landlording From A Distance
The beautiful thing about investing in property is that you don’t always have to live in the same area in which you own property. You can invest in property in an affluent and high demand part of town without having to live there. But being a long-distance landlord does come with some disadvantages. It makes it harder to build relationships with tenants and can make it challenging to perform renovations and repairs quickly. You can always hire a management company to take care of your property, but this means relinquishing a lot of the control you have as an investor. If you are moving away from your investment properties, you may consider selling the properties you have and buying properties closer to home.
There is no clear right answer about the best time to sell your investment property. Whether you buy, sell, or hold depends on your specific situation and financial goals. If you are earning money in your investment that could be earning higher returns elsewhere, it may be in your best financial interest to sell. If you don’t live close enough to manage the properties effectively, or the investment brings more stress and hardship to your life then they bring enjoyment, it may be better for your mental health and overall quality of life to sell.
Property investing is like a rollercoaster. There are always important decisions to make, and things change so quickly from one moment to the next. With careful planning and research, you can analyze the market and your particular situation to determine the best time to sell your property and move on to your next investment adventure.
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