Making the many decisions that come with owning an investment property can easily become overwhelming. These decisions often center around costs and earnings from your investment, but are also impacted by how much time and effort you want to spend on the property.
To help you with these decisions, we dig into the reasons you might want to sell your investment property. If you decide it’s time to sell, we explain how you can do so quickly, with an instant cash offer.
Cash flow is continually negative
Consistent negative cash flow is the primary reason to sell an investment property. It’s not creating income, it’s costing you money.
Expenses fluctuate making cash flow negative from time to time, but if you’re continually losing money on your investment property, it is no longer serving its overall purpose.
Look at your monthly cash flow and note how many months you’ve lost money rather than made money. How many months can you afford to continue losing money on the property? If the costs aren’t sustainable and you’re not moving toward earning income from the property, it may be best to move on and sell it.
You’re a remote landlord
Distance adds a layer of complexity to owning and maintaining an investment property. Not being there in person can cause you to feel a lack of control over the property. As a remote landlord, you might have little to no relationship with your tenants or it might be difficult to find tenants at all. This also makes maintenance requests and logistics more challenging than a property you can manage in person.
If you’re tired of managing the long-distance property or plan to move away from a current closeby property, you might consider selling it to avoid these hassles.
The cap rate has changed
Calculating the capitalization rate, or the cap rate, can help you understand if it’s worth owning or selling your property. It can help you estimate your potential annual rate of return on your investment in the real estate market, or the loss or gain you’ll see on the investment.
To calculate the cap rate, divide the annual net operating income (income minus expenses) by the property’s market value. An ideal cap rate should stay around 5% to 10%. Typically, the higher the cap rate, the better your annual return on your investment.
For example, a property with a market value of $325,000 brings in $24,000 in rental income a year, and $5,800 in annual expenses. Income minus expenses gives an annual net operating income of $18,200. Divide the net operating income ($18,200) by the market value of the property ($325,000) to get a cap rate of 5.6%
If the cap rate drops below the return of 3% that you could get from a treasury bond with no effort and no risk, you might want to consider selling because your current investment isn’t worth the risk that comes with investing in the property.
Owning property comes with varying levels of earnings and risk, which affect the cap rate, such as significant changes in the property’s expenses, rental income, or current market value.
It’s more trouble than it’s worth
Owning an investment property sometimes comes with other responsibilities you didn’t intend to take on, such as essentially having to flip a house, being a doting landlord, or frequently hunting down potential tenants. When owning property takes up too much of your time and resources, the trouble outweighs the benefits, and often the costs outweigh the earnings.
Property that requires constant attention might be worth selling, especially if you find yourself too often dealing with extreme repairs, difficult tenants, natural disasters, or other chronic issues with the property. If the property has not been rented in a long period of time, issues with the toilets, water heaters, air conditioning, faucets, and so on can add up, simply from lack of use.
How to sell my investment property quickly and easily
You might be hesitant to sell your property because of the time, effort, and costs it might take to do so. These concerns shouldn’t be the deciding factor for whether you sell your property. There are options to sell houses quickly and easily with an instant cash offer.
When it’s time to sell, Bolt and Beam can help to make the process go smoothly so that you can move on from the property.
We provide you with information and education about your selling options that otherwise aren’t available through the more traditional, and sometimes overwhelming, method of listing and selling your property after making repairs, managing showings, negotiating with buyers, and possibly waiting for months for it to sell. These steps are even more difficult if you’re a remote landlord and cannot handle these responsibilities in person.
Instead, Bolt and Beam can analyze your needs and give you information about your property and local market. From there, we’ll provide you with our best recommendations for instant cash offers, along with the pros and cons of each option.
Learn about your options for selling your investment property
To learn more about getting a fast cash offer for your investment property contact us today.
We’ll discuss your situation and make the best possible recommendation for selling your property without the hassle of a traditional sale, while helping you get the most out of your investment.