Should I sell my rentals in a hot market? – Royal Examiner

The real estate market has been extremely hot lately, with a shortage of homes available for sale and overpriced new construction (think lumber prices, tariffs and other factors) to follow.

The demand for rentals has also skyrocketed in most places and with it rental rates. With rental units so desirable, does that mean now is the right time to sell some or even all of the rental properties you own?

Ultimately, the answer is the same as it always is with real estate: it depends.

On the one hand, you might be able to charge higher rents, which would make your properties more profitable. Leasing has traditionally been a long-term strategy meant to generate (relatively) passive income, and as long as you make a profit and pay off the premise, many owners like not to sell.

Except when they don’t.

If you’re likely to make a good profit from selling – good being a subjective term based on your unique circumstances and goals – then maybe now is the time to cash in. Maybe you need the capital for medical bills, tuition fees, or other reasons. Or maybe you are considering another market.

You may want to sell and transfer the money to another investment, perhaps using a 1031 exchange that allows you to defer payment of capital gains tax (consult a professional on how to do this properly) . Many investors trade this way.

A variety of factors are at play in When Should I Sell? Scenario, and above all, a cool head should prevail. Take your time and approach it analytically, not just in reaction to a bull or bear market.

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