One of the biggest challenges in real estate investing is figuring out how to maximize revenue. While the decision to offload a rental property shouldn’t be taken lightly, in some instances hanging on to a property may not be in your best interest. Here are some signs that you should sell your real estate investment.
If your portfolio isn’t diverse enough, it might be a good idea to sell one of your properties to experiment with different investment types. Asset diversification helps to minimize an investor’s overall risk and offset losses in the event that a particular area performs poorly.
Having said that, focusing your investment property strategy on a niche market can bring many benefits.
There’s no doubt that rental properties are great sources of passive income. But if your rental property has significantly appreciated due to improvements or the area’s growth, it is possible that it may have reached peak value. In this case, it might make sense to sell the property while prices are high.
You can then use the money to reinvest in other up-and-coming real estate markets and expand your portfolio further.
Negative Cash Flow
When assessing the value of your portfolio, consider each property individually. There are several metrics available to help you measure the success of your portfolio, including net cash flow. It may be that the cost of taxes, utilities, and insurance have risen while rents stagnated or dropped. Whatever the reason, if your rental property is not providing a positive cash flow, you should seriously consider cutting your losses and selling it off.
Would you like to speak with a member of the RLG team to discuss the value of your current investment property portfolio and determine areas for improvement? Give us a call today! We would love to help you work with the properties you currently have and multiply your investment portfolio.