If you’re a mom and pop real estate investor, there comes a time when it’s just not worth the hassle of managing a rental property any more. But does that mean you should sell it? What other options are there?
1. You can hire a property management company, provided your cash flow makes sense. You’ll take home less, but have greater peace of mind.
2. If your management hassles come from maintenance issues, you might be able and willing to get an equity loan to improve the property in ways that make it easier to manage.
3. It might make sense in some circumstances to turn the rental property into your primary residence.
4. Consider a rent-to-own agreement with the tenants. You’ll attract a higher quality tenant and may be able to charge more to offset the money back to them.
There are also good reasons to sell. You might need the money for personal reasons, such as healthcare or to pay a debt. You might have an alternate investment in mind. You might have reached the limit of depreciation or the capital cost allowance. The property requires more updating than you can afford. Or perhaps the profit you earn now will outweigh future property value growth and rental income.
Before selling, speak with a tax advisor about your specific situation. There are capital gains taxes to factor in, and you’ll want to take advantage of tax deferment opportunities.
If selling turns out to be your best option, the next several months are a fantastic time to sell. Get in touch and we’ll get the ball rolling. (718) 399-3320