You may be considering whether this is a good time to sell your St. Louis investment property. For some investors, there are excellent reasons to sell. Others will want to pause before placing their asset on the market to analyze cash flow. You want to sell when the sales market is strong enough to deliver the price you want for your property.
The most important thing to look at when deciding whether to sell or hold your property is your investment goals. If this property no longer fits into your strategy as a St. Louis real estate investor, it might be time to let the asset go. If there’s still more money to be made from it, however, you can consider other things such as investing in upgrades or refinancing the property for better terms.
What are Your Investment Property Intentions?
Take a look at your reasons for investing. Most of the investors we work with buy rental properties for a number of reasons, including:
- Passive income
- Cash flow
- Tax advantages
There’s usually one overriding reason to invest. Maybe you want to diversify your investment portfolio with real estate that earns you cash, or maybe you need to bring down your tax liability and rental homes are a good way to do that. Whatever your main reason for investing, that’s going to help you decide when and if to sell a property. Decide whether your goals are the same and if your property is performing the way you expected it to.
Can You Increase Profitability Without Selling?
Another important question to answer is whether you’ve explored all the options you have with an asset.
Maybe you have the potential to increase the property’s profitability or performance, which would give you a good reason to hold onto it. A few upgrades can increase your rental value and help you attract and retain better tenants. It will also give you a higher sales value in a year or five years or 10.
When the maintenance and repairs required on your investment property are adding up faster than the income you’re earning on the property, it could be time to sell. Stop pouring money into maintenance and repairs that aren’t yielding any ROI. If you don’t want to spend additional money on a property that you’re not thrilled to have, you should direct those funds elsewhere. You can invest in other properties that are in better condition.
Make a Decision and Move On
Don’t force it. If your property is not performing the way you expected it would or your reasons for investing and your financial goals have changed, go ahead and sell. Maybe you need an influx of cash to pay for a child’s college education or retirement or you’re considering other places to put your money. Follow what you’ve planned for yourself and your portfolio, and don’t be afraid to make adjustments. One of those adjustments might be selling an asset.
Don’t forget that you can also exchange the property by using a 1031 exchange. If you don’t necessarily want to liquidate, but you do want to let go of a property, use the proceeds of the sale to buy another investment property. You’ll delay paying capital gains taxes and continue to enjoy the benefits of an income-producing property.
We can help you work through these decisions. If you’re trying to decide whether you should sell your St. Louis rental home, contact our team at Deca Property Management.