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Common Reasons To Sell Tenanted Property?

Posted Tuesday, June 30, 2015

Owning a rental property can be a good long-term investment, but at some point you are likely to have a reason to sell. There are a number of reasons why you might want to sell tenanted property.

Value has appreciated

One of the main reasons investors sell their rentals is that the price has appreciated significantly and they are in line to make a tidy profit. Over the long term, most real estate appreciates, but there often are short-term spikes that can increase prices rapidly. In those cases, it may make a lot more financial sense to sell property, take the profit and move on to another investment.

Market changes

In many cities, the property market moves back and forth between demand for rental housing and demand for owner-occupied properties. If you own a rental property in an area where renters are converting to buyers, you may be better off selling your rental. Not only will you lock in profits on the property, but you may avoid a downturn in the rental market that could cause you to lose money on your property.

Maintenance issues

Rental properties can be a lot of work to maintain. Tenants don't always treat the units very well and age can take a toll on property. You may find that after owning a rental property for a few years, it's no longer cost effective because the costs to maintain it are exceeding the profit you make on rents. In that case you may choose to sell, even if you take a loss on the rental.

Financial difficulties

If you run into financial difficulties, a rental property you own may be your largest or only asset to help you pay off your other debts. In that case, it may make sense to sell it and take the profit generated to keep yourself out of further financial difficulties, such as a possible bankruptcy or foreclosure on your home. The rental property itself may be the cause of the financial difficulties either because you are having trouble renting it or you are having trouble keeping up with mortgage payments. In either case, you would likely want to sell.

Personal reasons

In many cases the decision to sell property may be a personal one. You could be retiring or looking to make your life less busy. You also might have a new job or some other commitment you want to commit more time to.