Donít sell your rental property just yet Ė save your investment
By Sadiya Anjum
When youíve invested in a good property which is probably a cash cow Ė donít sell it. However, if you perceive that the value of your property is depreciating or will depreciate soon, then go ahead and sell. But make sure this isnít just based on a hunch. Also if you bought a property to make some quick money by selling it in a few months time, this also justifies a sale.
But most other reasons for choosing to sell a decent property may not be good enough because there are ways to work around them. Of course it is a matter of personal choice and opinion when it comes to investing but take the following factors into consideration before you jump into finding a buyer for your property.
If youíre just tired, old or both and cannot handle the hassles of managing tenants and their problems, your answer is simple. Hire a manager to take care of the property and he/she will deal with it while you donít have to lift a finger except maybe to sign the lease agreement. Another way to tackle the system is to set up a smart managerial process where you have a set of rules which you abide by, and state these clearly to your tenants. Find the right tenants with absolute scrutiny and work out a system for the other details Ė like a smart rental agreement, when and where to pay the rent, who will take care of the maintenance etc. If you want nothing to do with your tenants during their term, just hire an assistant to do the dirty work (that is in your opinion). Even if you donít want to set up the process itself, an automatic system for property management is available online. Buy it (less than $400) and all you have to do is go through the steps, policies, procedures and forms, and implement them. Problem solved - you keep your property and reap the benefits.
Another reason to sell a property is to buy something else just as substantial Ė a house, car, another property etc. Again you can work around this. Set up an equity line of credit on the property if it has no loans and mortgages on it. Many lenders tend to set up an equity line of credit to loan over 60% of the value of the property. If youíre thinking Ė not more loans! Ė think again, the rent your property will generate can easily cover it. Even if you are selling to buy another rental property, consider this. Buying as well as selling a property is expensive Ė for the former financing costs and for the latter, commissions, closing costs and taxes. So just borrow against the property you already have to buy other properties.
If youíre still unsure of what to do, get some professional advice before you jump into selling. But we say go ahead and keep the property you have. At least give it some serious thought on how you can avoid selling because if you are getting a steady income from it, it will be foolish to give it up. So think hard!
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