Real estate investors enjoy the thrill of acquisition. Who among us doesn’t? A new property, a new opportunity, a new adventure—there’s a certain excitement to it all that’s enticing.
To have a diverse portfolio is a good thing, too. We know, of course, that a variety of properties helps mitigate risk with that all-important safety net that keeps things chugging along should there be an unexpected vacancy or setback.
As buy and hold real estate investors, we don’t usually consider selling.
Still, it’s a reality. Sometimes, we need to make changes to our portfolio. We need to trim the fat, so-to-speak, and cut out some investment properties that aren’t serving our best interests anymore. Or maybe selling properties was always part of your plan.
But where’s that cutoff point? How do you know when enough is enough? Does it make you a quitter to sell? In short, no. Investing in real estate is all about strategy, and having a keen sense for when to buy and when to sell is a crucial part of an effective strategy.
So without further ado, here are some tips on knowing when it’s time to give a property the boot—because let’s be honest, letting go can be hard!
4 Reasons You Should Sell That Investment Property
1. Your original plan was always to sell.
A major mistake made by many real estate investors is to not methodically and patiently develop a plan for how they want to invest in real estate. Impatience often leads to mistakes. The mistake is never knowing if you are on-track, off-track, or when to make adjustments.
Related: Buy & Hold Real Estate is the Ultimate Investment: Here’s Why
Successful investors, no matter what the measurement used, are investors who make a plan before they start investing and follow that plan. That includes selling perfectly good assets that may be performing as expected. Maybe your plan as an investor was to make certain moves at certain timeframes, and that can include both holding properties forever and selling properties when everyone else thinks you’re crazy!
It is your plan for a reason. Make it. Follow it! You can always change at any point, but if you fail to make a plan at the beginning, you are already in the top percentage of real estate investors.
2. It’s consistently generating negative cash flow.
Now, there are absolutely scenarios where an investor should make a change, whether it is part of their plan or not. This one should be obvious, but it’s not as easy as we’d like to…