This is an excellent question that requires a lot of care in determining the answer to. There are many things to consider, including your experience with the property, quality of tenants, cash flow generated, how much you’re spending in maintenance costs every month, and numerous other things that affect how well rental property ownership will continue to fit with your lifestyle.
The number one reason that property owners elect to give up a rental investment is due to poor quality tenants. Tenants that cause excessive damage, neglect to report maintenance needs, and have little respect for payment due dates can be a major source of stress in managing rental properties. If your cash flow permits, it can be a good decision to hire professional property management; however, it won’t make high vacancy rates or non-paying renters any more tolerable.
If you’re facing the need to evict a tenant, it may require legal counsel and the need to judicially, and potentially forcibly, remove the tenant. Frequent overdue payments can be mitigated by maintaining a strict late payment policy and immediately issuing notices once the payment is due and unpaid. Regular involvement with the management of the property is essential to building rapport with and earning the respect of tenants.
Lost Opportunity Costs
Are there other investments you’re considering, but don’t have the liquid capital available? If this is the case, you may be losing money by not making the best return on your investment dollar. If your cash is tied-up in a poor or non-performing investment, you’re losing potential profit that could be earned by reinvesting that capital in higher return assets. Maybe you’re interested in transitioning your portfolio to stocks, REITs, or some other more attractive investment.
Accepting a cash offer from an investor will allow you to obtain almost immediate liquid capital to reinvest in whatever high return vehicle you see fit. Your lost opportunity cost may also be in the form of time. Rental property management is a time-consuming business that can take time from your other personal and professional priorities and responsibilities.
You never know what the market will bring in the coming years for your rental property’s value. In the years leading up to the market collapse in the late 2000s, there was a great deal of overconfidence in the continued appreciation of property values. While the same market factors that contributed to the prior crash are not present today, it is still prudent to consider the likely direction of the market over the short and long term.
Pay attention to market factors including industry growth, unemployment, population growth, and rental rates. When a community has reached the decline phase of its lifecycle, it is an excellent point to pursue an exit strategy. At the point which an investment property no longer provides an economic benefit, the best decision is to either sell the property, or raise the capital and invest the time to improve the property in terms of condition, operational efficiency, and consequent value.
Should I sell my rental property?
Depending on your situation and the economy, it may be either the right time to sell the property, or to recommit and put more money and effort into the project. If you’re leaning towards selling the property, contact us for a fair no-obligation cash offer backed up by experience and capital. Call us at (617) 250-7100 or click here to request an offer.