Is It Time To Sell Your Investment Property?
It is now well documented that inventories in markets that were rich with investment opportunities just one year ago have been drying up quite a bit. Hedge funds, private equity firms, and institutional backed organizations have been coming in and buying up inventory en masse. As a result, inventory has dried up! The result of all these is simple economics…less supply, higher demand, higher prices. And so we’ve seen some rather inflated inflation of prices in some parts of town. We have seen houses that sold for 50,000 one year ago now selling in the 70000-80000 dollar range. This is quite a jump of appreciation in a short time period. Time will tell how sustainable this all ultimately is but as we know, Wall Street has a way of coming into an idea and exiting just as quickly which can radically change prices. It is entirely possible that we could see a mass of price adjustments again in the future but only time will tell.
In the meantime, since we are in a bit of a bubble, the question is if you bought an investment property in the last 3 or 4 years where you got it at a great price that was nice and inexpensive for cash flow purposes, has there been enough appreciation to make it worth selling? Well, the question goes back to what are your goals? I read an article recently that said somebody sold theirs and they made $10,000. I thought to myself $10,000 versus no cash flow and for me that personally will not fit my goals however it might be a great goal for someone else especially if they have a hundred of them! Then perhaps that goal makes perfect sense as that’s a nice easy way to make quite a bit of money in a hurry. So, one must check their goals to see if in fact it is ultimately time to sell. We think higher prices in better days are still ahead but they are farther down the road based on strengthening and stable markets as opposed to a quick rise bubble which is what we are experiencing right now. So, if you own an investment property and you’ve thought about selling, I would ask you to consider to not abandon your long term goals. Did you buy the property for cash flow for the long term? If so, you may want to stick with your plan as we all know inflation is coming. If you bought with the intent to only hold properties for one, two, three years, then yes, maybe now is a good time to sell and cash in a little bit and move on to bigger and better things. As Robert Kiyosaki said, four green houses, one hotel. It’s not a bad time to do that all if you are looking to grow in that direction!
An argument to not sell may be that while cash is king, cash flow is even better. There’s nothing like getting a check every month for very little to no effort when owning cash flowing properties. It is truly one of the best avenues out there for making money and we all know the life blood of a business is its cash flow. We are in a special place where we have the opportunity to pick and choose before the market corrects yet again and I don’t think anyone doubts it will. In the meantime, happy investing, good luck to you and look forward to hear how it turns out.
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