When To Sell Investment Property

We’ve already explained the best time for buying an investment property, but if you’re looking into liquidating assets or wanting to diversify your investment portfolio you might be asking instead: “When is the best time to sell an investment property?” Even if it’s just idle curiosity, we’re glad you’re here because we’ve got the answers that will help maximize profit now or in the future whenever you’re ready to sell!

When Is the Best Time of the Year to Sell an Investment Property?

Spring is the best time to list when selling investment property. While the latest data is a bit skewed from irregularities triggered by COVID, according to findings from Zillow, March is the best month to list if you want to sell quickly. Also, April is the best month to list if you want a shot at higher profits. The sweet spot is the end of April, as that’s when a large portion of the population is gearing up to buy and move during the summer school break. Whatever month you settle on for selling investment property, DON’T list in September, October, or into the winter months as most people have settled down for the year and don’t want to disrupt the school term or holidays with moving house.

When to Sell Investment Property to Benefit Your Investment Portfolio?

Many people think that avoiding selling investment property for as long as they can is the best option if they want the most bang for their buck. Often they’re right, but not always. There are many factors that come into play that might make selling your investment property the best option for improving your investment portfolio, including:

• If the property is costing you more than you can afford with no indication things will improve long-term. An example of this scenario could be that the building is falling apart due to poor construction or prior neglect and repairs will cost more than the property is worth. Ideally, you’d be aware of deal-breaking issues before purchasing the property, but sometimes you just get unlucky and need to cut your losses and sell.
• Lifestyle change. Maybe you need to liquidate your investments to fund your retirement plans or perhaps you are just tired of managing tenants and repairs. Maybe you have enough passive income to live comfortably in the long-term and no longer need the rental income. An upcoming lifestyle change might be a good time to consider when should you sell an investment property.
• Diversify your investment portfolio. Property is a solid investment in general, however, if ALL your investments are in real estate you are at risk if the market starts declining (we’ve all heard the classic phrase “don’t put all your eggs in one basket” in relation to investing!). If your investment portfolio is too focused on real estate, selling investment property and reinvesting the funds in another sector might be a good idea.

Best Stage in Life for Selling Investment Property?

Because the proceeds from selling an investment property can be taxed heavily, we recommend waiting till you are in a lower tax bracket, if possible, to decrease the tax hit. An example of when this might be the case is if you’re expecting a salary decrease due to retirement or other factors. 

Another way you can lower taxes when selling investment property is by living in the rental property as your primary residence for two out of the five years immediately preceding the sale. So, if you’re considering when to sell investment property, try to time it with a stage in life when you’re retiring, when your income is lower, or when you are ready to move into a new place!  

Want to learn more about when to sell investment property?

We’re experts in real estate (particularly the buying and selling of investment property) and we’re here to help! Feel free to contact us if you have any more questions about this topic or if you’re interested in selling or buying investment property in the Mobile, AL area. We look forward to hearing from you!