Trying to Time the Market

[Greg Harriman]

I own a home that I rent out and the lease is almost over - my gut is telling me it's time to sell.  My options are to either find a new tenant or sell the sucker.  The home is located in Bothell, Washington (Seattle area) and my rent is less than half of one percent of the market value of the home.  There's enough equity in the house to divest of the investment and invest elsewhere but what if this market continues to appreciate like it has the past 3 years!?!?

I know at this point I'm trying to time the market and not lose out on a possible gain but I can also lock in my profit now and be patient to find a better option elsewhere.

Are any fellow Seattle-based people running into this same situation?  If so, what option are you going with?

[Patrick Britton]

@Greg Harriman Looks like you have a (good) problem :)  

Couple of questions:

1.  is current fair market rent much higher than what you are currently charging?  If so, perhaps it's worth increasing rent when the lease is up?

2.  is the current, or future fair market rent, covering your mortgage and/or all other expenses?  (are you cash flow positive?)  

3.  do you have enough equity to pull from the property and use that for another investment?

4.  how do you know what the home is worth?  

I've been in a similar position and I must say that kicking yourself in the butt for not holding your investment longer is a lot better than saying, "I knew I should have sold!"  And please keep in mind that your ability to sleep well at night and your quality of life might be worth more than making a few extra bucks.   

However, there isn't any evidence supporting a market decline anytime soon, especially down in King CO.  One metric I like to look at is closed sales and percent of list price properties are selling.  It will be worrisome when properties begin to get well under 100% of asking price AND the number of homes that sell is in decline.  And we are simply not seeing that.