Even though owning a real estate investments can be a lucrative way to build your wealth and secure your financial future, there are times when an investment property may no longer be the right choice for you and may even become a financial and emotional challenge. In this blog post, we’ll discuss the five signs that it’s time to throw in the towel on your Surprise real estate investment.
1. Negative Cash Flow
One important indication that your investment property is not performing well and may be detrimental to your wealth building is that it is producing a negative cash flow. It means that the expenses associated with the property, such as mortgage payments, taxes, insurance, repairs and maintenance costs, HOA fees, management fees, etc .are greater than the income it generates. Negative cash flow can be a sign that it’s time to sell the property and move on to other investments that will provide a better return on investment.
2. Property Tax Increasing
Rapidly rising property taxes can be a signal to sell. Or maybe there’s a pending special assessment from your condo or homeowners association that will decrease your cash flow significantly when it is approved.
If your return on investment on a property has been declining, it might be a good idea to sell and purchase a different property in a better location that’ll have better cash flow and profitably.
2. High Vacancy Rates
Certainly periods of time when you do not have a tenant paying rent for your investment property can also be a crucial factor in assessing the performance of your property. If it is sitting vacant for too long a period of time — high vacancy rate — it means that your property is not attracting tenants, and you are losing out on rental income. A high vacancy rate can be a sign that you need to re-evaluate your rental strategy or make improvements to the property to make it more appealing to potential tenants. However, if you have tried everything and the vacancy rate remains high, it may be time to sell the property and move on.
3. Declining Property Values
Market fluctuations as well as other socioeconomic factors can cause your real estate investments values to rise and fall over time. However, if you notice that property values in your area have been declining consistently, it could be a sign that it’s time to sell. A declining market can make it difficult to sell your investment property for a profit, and you may end up losing money in the long run if you hold onto the property for longer than you should. In some cases, you may be better off selling right away, as opposed to waiting around for things to get worse.
4. Major Repairs Needed
Maintenance and renovations are a constant cost of rental property ownership. While minor repairs are a part of the regular upkeep of any property, major repairs can be a significant financial burden. Maybe you’ve been putting off maintenance because your tenant has been there for 10 years and never complained. But now they’re moving out, and you don’t have the funds for those neglected repairs and necessary upgrades before placing a new tenant. If your property requires major repairs that are beyond your budget, it may be time to sell the property before the situation gets worse. Delaying necessary repairs can lead to more significant problems down the line, and it may end up costing you more when all is said and done. This could mean it’s a good time to sell to another investor in an “as is” condition and move on.
5. Personal Circumstances
Finally, personal circumstances can also play a role in your decision to sell your investment property in Surprise. Life changes such as a job relocation, divorce, or the need for immediate cash can make it necessary to sell your property quickly. The hassles of being a landlord may have became greater than the joy of cashing those rental checks. In such cases, it’s essential to weigh the pros and cons of holding onto the property versus selling it quickly to meet your financial obligations. Being a landlord is not an easy or glamorous job. And you may eventually decide you’d rather do something else with your money and time.
Owning an investment property can be a rewarding experience, but it’s essential to know when it’s time to move on. If you notice any of the five signs mentioned above, it may be time to sell your Surprise real estate investment and invest your money elsewhere. Remember, the ultimate goal of any investment is to generate a return on investment, and if your property is not doing that, it’s time to consider other options. If you are looking for a way to quickly sell your bad investment property in Surprise, reach out to our team to find out how we can help you! (928) 421-2678 and (928) 239-7573