7 Reasons to Swap out your Investment Property for Another
You have owned a rental property, or several, for a while now. Do you feel you have been getting all you hoped for from your investment(s)? Do you have an investment property that has turned out to be a disappointment? Maybe it used to be a great investment, but it’s getting older and the maintenance costs have been increasing. You are even starting to notice how old and rundown the neighborhood is starting to look.
You might be wondering, when is the right time to trade in your investment. I will share some useful information to help you answer that question so you can be a more profitable investor.
First, you should know that selling a rental property and buying a different one can have certain tax implications if it is done incorrectly. You can avoid certain taxes and save yourself a lot of money when it is done right with a 1031 exchange. The experts at 1031 Pros can help you maximize your buying power by helping you reduce your taxes. Contact 1031 Pros for more details.
Second, selling one property to buy another can be expensive and time consuming, so you want to make sure you have carefully weighed the pros and cons before proceeding.
Here is a list of 8 questions you can use to help evaluate your investment property to see if it might be worth trading it in for a different one:
Is the home more than 30-40 years old?
Is the yard overly complicated, time consuming, and expensive?
Do you have a long list of projects or updates that the property needs?
If you perform a search for comparable rental properties, are most of them nicer than yours?
Does the property seem to be having more repairs or maintenance issues than one would expect?
Are you consistently attracting low quality tenants?
Is there anything else about the home you are tired of dealing with that might not be an issue with a different home?
Any one of these items may not be a reason to make a change but the more of these questions you answer yes to the more likely it is that you will find a better return with a different property.
One major pitfall that causes people to stick with a less profitable property, even when they answer yes to all seven of those questions, is loving the property too much. Possibly you love it so much because it used to be your own home and you always had a plan to rent it out. It’s hard to stray from your plans especially when you’ve dreamed of it for a long time, but ask yourself what your real goals are. Are your goals to have a good investment or multiple investments so you can have a comfortable retirement, or do your goals center around loving and cherishing a particular property? Don’t put your plan above your goals. If your plan needs to be adjust to reach your goals then talk to a competent property manager, Realtor, and the experts at 1031 Pros.
Once you have decided that you might benefit from exchanging your rental for a different one, you will naturally ask yourself, what type of property should I be looking for? You don’t want to trade one property in for something that isn’t any better. You want to make sure you are making an upgrade. Watch our short video, “What Type of Rental Property Should I Buy?” You will learn the valuable information you need to know to maximize your real estate purchasing.
At Kasteel Property Management we do more than just watch your rental property. We protect it, cultivate it, and help your investment grow.
Kasteel Property Management