Owning investment real estate can be a great long-term investment. While investment real estate properties are intended to be long-term investments, there will come a time when you eventually should sell the property. While determining the exact date when you should sell the investment property can be challenging, there are several tips that you can follow that can help you to better determine when it is time to sell the asset.

You Created Value

The first situation in which you may want to consider selling your investment property is if you have already created value in the asset. If you have purchased an asset that needed to be repositioned in the market through renovations or other changes, you could end up creating a significant amount of value once the changes are implemented. If you have suddenly much more equity in the asset, it may make more sense to sell the property and then invest into another asset while following a similar strategy.

Tax Benefit Runs Out

Another sign that you should sell your investment real estate property is that your tax benefit is running out. When you buy an investment property, you can depreciate it over a 27.5-year schedule on your taxes. This can greatly reduce your tax liability on an annual basis. If you have held the real estate for a long period of time and have had it fully depreciated, your net cash flow each year could be reduced due to the higher taxes. Because of this, selling the asset may be a good option.

Achieved Financial Goals

Another situation in which it may be a good idea to sell your investment real estate is if you have achieved your financial goals with the investment. When you purchase a property, you should have a long-term goal for how much money you want to make on the investment. If you have already achieved these goals due to cash flow and value appreciation, you may want to consider selling the asset and finding a new investment as a new investment could provide an even higher ROI.

No Time to Manage

If you have owned an investment property but have not hired a property manager or leasing agent you may find that ownership requires a lot of work. In these situations, it may make sense to sell the property if you no longer have the time necessary to manage it properly. Another option may be to hire third-party help, but you will have to carefully consider the costs of hiring those services.

If you are a real estate investor, you should contact us to learn more tips about how to know when it is time to sell your investment property.