Should You Sell Your Investment Property?

The spring real estate market is in full swing. Don't believe me? Whether it's warm and sunny or cold and blustery where you are, renters are looking to move. As an investor, do you have a vacancy coming up. Or instead of continuing to rent out, are you looking to sell one of your real estate investments?

If you follow the news media, you're probably thinking of just waiting till next year and see what happens instead of planning to sell your investment property. We all watch the news and follow social media, but how much of it is real and how much of it is the producers' hype looking for ratings? They all tell us that mortgage rates are up and buyers demand is down. Honestly, I don't see the demand waning here in Pittsburgh, PA. But as a savvy investor, you've really got to do your research and run your numbers. Are you getting the desired cap rate, what is your net operating income, are your rental rates comparable to the area and condition? If you sell, will you make a profit or lose your shirt? All of these questions and more go into making a sound decision on whether to keep a money-making asset or unload an under-performing liability? It may help to talk with a CPA. They can discuss things such as "diminishing returns" because there does come a point as investment in a property increases, the rate of profit cannot continue to increase if other variables remain the same. Many, many factors to consider. So, when is the best time to sell?

After you've done your research and answered a lot of questions, perhaps now's the time? Spring is traditionally a strong time for the real estate market. Buyers are feverishly looking at good deals. As a REALTOR®, I work in this market every day. And I can tell you, here in Pittsburgh homes and investment properties are selling quickly...and many are getting multiple offers! Currently an investor I'm representing has 15 showings. While it's not the same craziness as it was over a year ago, it still exists. I'm stressing to my buyer clients to not sit back, but jump in. Yes, mortgage rates are higher than those of a year and a half ago, but in my opinion and those of my mortgage colleagues, this will likely be the new normal. (True story: My Mom and Dad built a brand-new home in 1957 with a 6.5% interest rate...and that was a great deal, in their opinion).
Listings are increasing with asking prices at or above last year's comparables. The longer you wait, the higher the prices will be. If you don't agree with me, I welcome the challenge.

If you're thinking of selling your home or investment property, get on it whether your plans are now or sometime this year. Getting your property "show ready" is critical to attracting buyers and obtaining the highest price. The chart below from Keeping Current Matters hits some great points:

If you're still unsure, ask your real estate professional to walk your property with you as if you're planning to list it for sale and get their opinion on what you need to do to prepare. At that point you are under no obligation to sell, you're just gathering information. What each of us "sees" in our property every day may not match what potential buyers are looking for. We may live every day with that old dingy beige carpet, but most buyers are looking for hardwoods or luxury vinyl floors even in some investment properties. And of course, the potential buyer is looking for a lucrative deal including list price, room for negotiation, rent rolls, expenses and other financial information. Many investment experienced realtors are in properties every day with buyers and listening to their feedback. They'll gladly share their knowledge with you to help you sell quicker and for a higher price.

So, take a critical look at your property. Is it show ready? Are you prepared for the Spring/Summer time to get it sold and prepare for the moving public? Does it make sense to do it now? If it's time...go for it! If not or unsure, call your Realtor to strategize. Regardless...get READY!!'
All the best...Gary