Portfolio: Keep or Sell

[Arron Paulino]

How long do you typically wait for a rental property to sit on the market before considering selling it? I have a property that has been on the market for over three months now without receiving a qualified tenant and I may want to sell it to get some liquidity.

It has also been hard to receive monthly profit for myself since my property management has a portfolio minimum of $2k until they allow me to take home proceeds at the end of the month. I get charged 10% on property management per rented property, lawn maintenance and service utility on the properties not rented, and miscellaneous expenses on little things that pop up for maintaining the properties. I currently have 4/7 properties rented out and 3/7 still on the rental market. One of those 3 I may be a little more patient with while the other 2/3 I am considering just liquidating.

I appreciate the thoughts on this!

[Brian S.]

First thing is the management company should be working for you. They shouldn’t “allow” you to do anything. I would get rid of them if they can’t rent the properties. They are profiting more by them not being rented than them being rented, based on what you’re saying. I don’t use management companies that charge me when it isn’t rented. I want them incentivized to rent it out, not to sit on it. I would also look at why they aren’t renting. There was just a bigger pockets podcast that came out yesterday (Friday) that talked about rents and the market. There is some analysis that needs done. See if you can run comps and narrow it down to the few that are in your neighborhood or as close as you can get to it. Once you have that, grab the mean and drop the price by $100 a month off it. I have been renting houses out for over a decade now and this has worked well for me. I have never had anything sit for more than a month. All that said, if these are D’s then you may be getting hit with supply issues, depending on your market. I would personally sell those now but I don’t like D’s so take it for what it’s worth. If it’s C or above, getting the new management company, doing any updates needed to be comparable to comps, and adjusting the price properly should correct this. That said, trading up is never bad but there isn’t enough information on what you have, your goals or you timelines for me to offer suggestions on whether or not you should sell. I would do the analysis first and based on what you find, see if the numbers make sense in your situation then make your decision based on those numbers. I hope that helps.