I promised my wife I’d work with her and be available to help with the income taxes for a couple days. I drive the MRS crazy with the things I do. I decided that since I have time between her questions, I’d post today in between her requests. I’ve always spent about half the year earning money and the other half figuring out how to keep it. As I’m doing this, I realize I may be able to offer some su…
Source: www.biggerpockets.com
Is there a perfect time to sell?
I think there are many different answers to this question, depending on which business you’re in.
If you’re in the flipping business, then you obviously want to sell ASAP.
If you’re in the rental property business, then “almost never” is when you should sell. The reason I say “almost” is that I wouldn’t sell unless there is a fundamental shift in the business that causes it to be undesireable. An example of such a fundamental change would be the government no longer allowing a the tax deduction on interest or no longer allowing depreciation. Another example of a fundamental change would be a wealth tax where the government taxes our equity. Other changes could be a ban or long moratorium on evictions or nationwide rent control. Those types of fundamental changes could make it impossible to generate a positive cash flow in the rental business and would necessitate selling.
When to sell becomes a much more difficult task if you’re speculating on appreciation, especially if you buy a property with negative cash flow. We’ve had posts on this forum where people were promoting holding a property for two years or 5 years. However, if a person bought a property two years ago with a philosophy of holding for two years, we all know how well that’s working!!!
I’ve asked the question ‘when to sell’ of the “appreciation” crowd several times. Do they sell when a certain level of appreciation has been achieved? Do they sell when a certain length of time has passed? Do they sell when there’s a solar eclipse? Do they sell when the market is at a peak, and if so, how do they know when that occurs? To date, I haven’t heard a good answer.
Mike
Source: www.biggerpockets.com
