When you buy investment property, at some point down the road you will question if it’s time to sell or hold on to it. Everyone hears horror stories of investors waiting too long … or selling too soon! It is a delicate balance. So how do we know when to release our investment properties?
 
No one has a crystal ball to gaze into the future, but there are some big signs that can tell you when it’s not a good time to sell.
 
If these things are happening, you should keep your investment property:

1. Market prices are only going up. Be sure you keep a realistic and constant eye on the market where your investment property is located. Some areas, such as ours in the Cape Fear region, hold steady and even continue to trend upward every year. Other areas are different. If market prices start to dip, it might be time to reconsider. But if market prices are going up, don’t sell!
   
   It is important to note, however, that market prices should be going up at a sustainable level. Years ago, before the housing market crashed, it was clear that house prices in some regions were rising at inflated levels, levels that couldn’t possibly last. The key indicator to a healthy market is one that is steadily and slowly going up.
    
2. If you are interested in doing some upgrades in exchange for a tax write-off. There are many tax benefits to keeping your investment property, and a slew of articles have been written on that topic. But one thing you may not know or take into account is that if you are to do upgrades to your rental property, you are eligible for a tax write-off. Perhaps instead of selling an investment property because it is aging out of the competitive market and not getting the rent you want, it is better to invest in improvements. These upgrades will not only secure a tax benefit for you, they also will allow you to charge more in rent and, when it is time to sell, list higher on the market.
    
3. If you want to hedge against the ups and downs of the stock market. We aren’t going to give you advice about managing your entire investment portfolio, but it is true that the real estate market is much steadier than the stock market. As you think of selling your investment property, consider how you might otherwise invest the cash from the sale, and weigh it carefully against the volatility of the stock market. If the sale is not going to result in cash for you, then why sell? Certainly don’t sell your investment property now if it means losing money. The market will come up if you can be patient.
    
4. Rental prices are steadily going up in the area. Similar to keeping an eye on market prices, keep an eye on rental prices. If you find that your property can get more in rent every year, then hold on. If rental prices in the area where your investment property is located are dropping overall, it might be time to reconsider. If you do not live in the area of your investment property, consider contacting a professional management company that can help you appropriately price your rental.
    
5. If you can have a professional property manager for your property. If you’ve decided to engage a professional property manager, then you can hang on to that investment a little longer! A professional manager and management company is going to help you assess rental prices, manage upgrades, and keep your property clean and functional. This will help your property’s resale value (when the time comes) as your investment property will be in great shape.