When should buy-and-hold owners sell?

[Kenneth Pinneo]

Am working on developing a system that helps buy-and-hold investors to Maximize ROI By Optimizing Holding Periods.  Actually, this is (what I believe to be) the last strategic aspect of real estate investing that has not been mastered (or taken advantage of) until now.  

If you were to ask buy-and-hold property investors when they plan on selling their property, you would typically get vague, general answers. Even those investors who DO realize that there must be an opportune time to sell will give you an uncommitted answer because they have NO system that gives them practical, actionable information. If you Google the question "When should I sell my investment property?", you will quickly reach the conclusion that even the gurus and top advisors only have general recommendations. In addition, a look at the online blogs and discussion forums regarding this subject makes it abundantly clear that this is a topic with high interest levels but with no practical, definable solution. 

You see, ROE (Return on Equity) - in normal circumstances - decreases steadily over a period of years. If you think about that, you will ultimately reach the conclusion that there must be an ideal time for every RE investor to transition from the relinquishing property to their next property in order to maximize their total profits. If the investor acts too soon, they are accomplishing not much more than churning profits. If they wait too long, their total profit potential diminishes due to ever-increasing opportunity costs (considering what their ROE could be in alternate property investments). There most certainly is an ideal time for every buy-and-hold investor to transition to their next property, but this timing is different and unique for every single investor/market/property combination.

Make no mistake, how long an investment property is held has a significant impact on the total profit an investor will realize - regardless of purchase price, property class, market, investor specifics, or other value-add strategies being used. Maximum profits will only be realized when the investor employs optimum timing strategy in addition to their current holding strategy. 

I invite all comments / questions.