If you own a residential or income-generating property, you might be considering what you want to do with it in the long-term. Is it best to sell it or hold it? And what other options might you have? For many, an income-generating property such as a rented condo can help in providing financial stability. However, if being a landlord and the process of property management takes up too much of your valuable time, you may be wondering if there are other financial options that can provide what you’re looking for.
Rental Property Pros and Cons
If you own a rental property, most likely a condo or an apartment or two, the goal of that property is to provide you with income to help cover your costs and provide financial stability for you and your family, not to mention the equity you own in the real estate. It’s a great feeling to have multiple income streams to help you reach your financial goals and have something to fall back on if one income stream dries up. However, there are some key costs associated with owning a single rental property.
Firstly, managing what’s called the “terrible Ts” of rental property management can be difficult and undesirable. The “terrible Ts” refers to tenants, trash, and toilets in reference to all the parts of property management that can give anyone a headache. Tenants, whether it’s finding them or managing bad ones, can put a lot of work and stress on your plate. Trash is also a pain to deal with whether it ends up on your property or isn’t disposed of properly. And toilets, because fixing them, and other appliances, when they break is a real pain in the neck.
Of course, it’s important to keep a level head about it and know that sometimes a handful of things can go wrong at once: a tenant gets difficult, they improperly manage their trash, a pipe breaks, etc. Just because a handful of things go wrong at once doesn’t necessarily mean you should sell. However, these items may have you questioning what else is out there that can generate income the way your rental property does, especially if you’re thinking of winding down for retirement.
What Does Selling Your Rental Property Entail?
If you’ve considered the pros and cons of owning your rental property and have decided that maintaining your rental property will likely be more costly to you than replacing it, then selling could be in your future. But before you sell, there are key factors about the process you should know—it’s not as straight-forward as you might think.
Have you considered closing costs? What about capital gains taxes? And most importantly, what will you do next with the proceeds of the sale? These costs are crucial in understanding if it’s actually better for you to hold or sell your property. However, if you’ve decided to sell, you’ll need to have a plan for what will commensurately replace your income-generating asset.
Tune in to our next blog which will discuss what strategies you may have for replacing the assets and income generated from your property.
Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor.
This is for informational purposes only, not an offer to buy or sell any investment, and is not to be relied upon as tax advice. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor.
There are material risks associated with investing in restate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal.
Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated.
Securities offered through Concorde Investment Services, LLC (CIS), member Fl NRA/SI PC. Advisory services offered through Asset Strategy Advisors, LLC (ASA), an SEC registered investment adviser. Insurance services offered through Asset Strategy Financial Group, Inc. (ASFG). CIS, ASA and ASFG are separate companies.
