Is it time to sell your rental property in Sacramento, Stockton or Modesto? In our latest post, we discuss the 5 factors that help you determine whether or not you are a prime candidate to just sell your rental property!
For years Sacramento Real Estate Investors have known that owning real estate is one of the best strategies to generate income and build long term wealth. In a perfect world, it is a great approach, but the world of real estate investing has changed and even individual real estate investors differ on the best formula in today’s market.
Regardless of the approach, there are some axioms that still matter, even in today’s investment real estate market….
Location, Location, Location.
If you have owned rental property for any length of time you have probably seen first hand, that what was at once a great location may no longer be. It happens. Populations shift and migrate in all cities. Older neighborhoods generally give way to newer developments and unless there is serious investment efforts made by property owners some locations take deep dives and hits to property values and quality and trouble free rentals. Vibrant city centers that are not maintained loose their luster and the surrounding housing markets tend to reflect that decline. In Sacramento and most other central valley towns and cities its all reflective of the core investments. The areas that maintain the highest standards retain the highest investment opportunity. Likewise, your willingness to pour additional dollars into neighborhoods that have not aged favorably, will be determined by that return on investment and your ability to attract the highest quality and paying tenants.
Regardless of how you acquired your rental property, the investment you made dictates that there must be a return on investment (ROI). While rentals need to have tenants to be productive, the age and the condition of that property dictate far more the type of tenant that you can attract and retain.
Properties that cannot attract and keep quality tenants become vacant and these properties left to their own devices are neither intrinsically profitable or good at generating profits. The truth of the matter is, that not every property is going to be profitable. Many investors find that they hold on to properties far longer than they should, and in some cases any profitability that was gained is lost down a rabbit hole.
It may be time to take a second look to determine whether or not that investment property can ever be turned back into a performing asset. In some cases the return to profitability may be to just sell the property, take you losses (for tax purposes as well) and move on.
If your investment property isn’t performing as you would like to, maybe it’s time you consider selling it for something else! Keep reading to learn more about our 5 signs it’s time to sell your investment property in Sacramento.
Is There Negative Cash Flow
Investment properties will always have their ups and downs. It’s part of being a landlord. You always need to look for patterns. If this is a regular occurrence, it might be best to hold on through the slow period. But if you are consistently seeing negative cash flow or if you are having trouble retaining high-quality tenants, it might be best to cut your losses and walk away.
Questions to Ask;
- How many times have has the property been vacant in the past 5 years
- What is the average cost of repairs annually
- What is the average cost of repairs after a tenant has vacated
- What is the cost to attract a new Tenant
- How many evictions have I had to deal with in the past 5 years
The answer to all of these questions individually or collectively may indicate what kind of rental property that you have. It may also be indicative of what you are willing to accept as a landlord. The hardest thing to admit is that we can’t make an investment work. The question is why are you working so hard at it and is it based on the numbers really an investment or a money pit? If So, it may be time to ask… Who Buys Houses Sacramento?
Nowhere is it written that you need to suck it up and hold on to your rental property forever. Let’s face it if you are losing money , there are better investments out there, and using the cash from your underperforming rental is a great way to change your situation once and for all.
Difficulties In Investing From a Distance
Being a remote landlord can work for some people. But in most cases, paying a property manager can be expensive and ineffective and I can assure you… handling things on your own can be next to impossible. Property showings, tenant screenings, checking on the property, and building a relationship with your tenants can be difficult when you aren’t located nearby. In most situations, an absentee landlord will fail to manage a property with a tenant without the use of a property manager. Many times, these relationships are possible because the landlord and the tenant knew each other previously or through a friend. If that is the case, your lucky. If not, why take the risk?
The Value Has Jumped Significantly
For the past 9 years the real estate market has steadily risen and all houses have benefited. Let’s face it investing is certainly about the “BUY”, but it does have another component and it is the sell. That said, it’s also knowing when to get out. If you could sell your sacramento house for a substantial profit, it might be in your best interest to do so. While you could be collecting rent each month, and slowly profiting over time, there aren’t any guarantees you will be able to retain high-quality tenants for the long-term. You may run into vacancy issues, the rent prices in your area may fall, and the overall value may drop before you decide to resell down the road. If you have the opportunity to resell the property at a significant profit, it is something you will definitely want to consider.
Maintenance Costs Are Rising
As the house gets older, it will likely cost more to maintain it. As you see your profits diminish and your repair bills grow, you need to ask yourself if this pattern will continue. Having to fix one thing after another can be extremely costly and frustrating. Not only can the maintenance get expensive, but the time and stress caused can be overwhelming for Sacramento investment property owners. Your investment should be a sense of pride and generate income for you and your family. Property in any other state may be more trouble than its worth and a great candidate for a resell.
Is it Time To Sell Your Rental Property in Sacramento
Do you own an investment property in the Sacramento area that you wish you could sell? Call Westbrook REI and let’s work together pull the numbers! You know whether or not you should keep the property, sell it directly, or hire real estate agent to help you! You have options when selling your Sacramento House, and we are here to help!
Is it time to sell your investment property in Sacramento? We can help you explore the options available to you! Get in touch with us today to learn more!