When is the right time to sell your investment property?
Buying a property for the purpose of earning a passive income. is an endeavour that requires a fair amount of foresight into real estate and financial management. When you first purchase an investment property, it's natural to think this is going to be a permanent fixture in your life, but it's important to note when it's time to let go in order to avoid risk.
With Spring upon us, it's time for fresh, new beginnings. We take a look at some of the ways for you to determine when is the right time to sell. Consider showing off your property at its best during this wonderful season.
Time-consuming efforts
It's a common occurrence for landlords to believe that property management will not take up too much of their time. However, this is a misconception as running the maintenance, advertising and upkeep of a property can often be a full-time job. Especially with demanding tenants or a short turnaround time of lease agreements. It may become stressful to deal with over time if it isn't the only thing you need to devote your attention to. Even for those who are retired, it's unlikely you will want to spend your golden years attending to the living arrangements of other people.
If you feel your enthusiasm for being a landlord start to fade away, it might be time to put the for sale up on the front lawn.
Increase in property price
If your property is now worth more than what you initially paid for it, it makes good business sense to sell it while you're ahead. With something as unpredictable as the real estate market, it's better to strike while the iron is hot. Your investment appreciating in value is the end goal and once that happens selling it could be more fruitful for you than renting it out indefinitely.
Once you've identified that you're in the running to make a substantial profit, contact a property practitioner to help you get the best price for your property.
Your overheads are too high
Once your property starts costing you more than it's bringing in, it's time to throw in the towel. Balance out the figures in black and white can help you pull the plug on extending the drain on your finances your property is becoming. If regular maintenance, increasing rates, taxes and insurance are too high, it may be better to cut your losses while you're still ahead. The costs associated with maintaining properties that are permanently rented out are high, especially when your tenants aren't timeous with payments or you don't have a secondary source of income.
Your tenants' leases have ended
The uncertainty that comes with a lease ending before you've found a replacement tenant can be daunting. It can be easy to leave the property on the rental market for a while, but soon costs will begin adding up that you haven't budgeted for. Factor in the time it takes to screen potential new tenants, organise paperwork and make any home improvements they might request and you've got a loss of time which equals wasted money. It's a good idea to put your investment property on the market towards the end of your tenant's current lease agreement (3 to 4 months prior to expiry). This allows your buyer pool to include purchasers that are looking to take vacant occupation of the property as well.
You feel a need for change
Selling your investment property for a personal lifestyle shakeup is a good enough reason as any. You may want to diversify your real estate portfolio and not want all your capital tied up in one place or you may want to sell to purchase a different place in a new location for a change of scenery. Especially in a market as lucrative and beautiful as Cape Town, the investment opportunities are endless.
You can learn the ins and outs of property management, leasing and selling through professional advice from our property practitioners at FMS Sales and Leasing. We walk you through each step of the journey and provide valuable information on:
- Tenant management
- Routine inspections
- Tenant screening
- Property portfolio optimisation
- Block-level specialisation
Take advantage of expert resources at your fingertips. Contact us today.
07 Sep 2022
Author FMS Sales and Leasing