Some people who are fortunate to purchase real estate do not own a property for longer than 2 years. While every investment has pros and cons, making mistakes in the housing market can cause an immediate need to sell a purchased property. Someone who is wondering should I sell my rental property can use some simple strategies to come up with a definite answer.
Every person will have a unique circumstance that could lead to thinking that a property must be sold. While two people can have different business investments, the reality is that there is no one single decision that will dictate whether a home must be sold or held onto for future profits.
1. Evaluate All Taxes
2. Estimate Annual Repair Costs
3. Calculate Tenant Turnover
4. Pay Attention to Market Rent
5. Decide on Property Management
Taxation can be a surprise especially if a person has only owned a property for a one-year period. The end of year taxes that come in from federal and state sources can be a real shock to a property owner. Paying income on profits is the idea of capital gains.
Someone who earns a profit as a rental property owner should always evaluate the taxation and find out ways to reduce future taxes. Property taxation could be lowered if an assessment of the home proves a lower value. If taxes are eating into the annual profits, it might be a good time to sell the home.
Older rental homes that have had many tenants through the years usually need to be upgraded. Pipes break, insulation loses its r-value and roofs deteriorate with each passing season. Keeping up with home repairs is needed although only if it makes sense to do so. Someone who is paying over a maximum threshold for repairs each year should consider selling a property to cut losses.
When too many people rent a house, a bad reputation can be earned for the piece of real estate. A certain level of respect is desired by each property owner although not every renter feels the same. Unusually high tenant turnover could mean that the wrong people are being allowed to rent the property. When a person does not renew a one-year lease, finding out the cause of the turnover is important. Too much turnover might lead to a decision to get rid of the home.
There are generally two types of rent for a property. The first type is the amount that a landlord believes he or she should receive. The second type is how much money people are willing to pay otherwise known as the market rent. If a rental home is not profitable, it might make sense to evaluate the rental prices more often. Getting more dollars each month could turn a property around in profitability. Squeezing too much rent out of a house that is not marketable is usually a pending disaster.
A lot of people who buy a home and try to manage the property ultimately fail. It takes many years of experience as a landlord to understand the needs of renters. Professional property management companies exist to offer services that take the load off of a landlord. Professionals can also evaluate rent prices, collect rent and take care of any repairs that might be necessary. Consulting with a management company could help to turn a non-profitable home into one that earns money.