A rental property is a good investment if the costs of running and owning the property are lower than the money that property brings in. But what if that rental property isn't quite working out for you? If you're no longer thrilled with your investment, it's time to ask yourself if you should cash out and sell that rental property.
They Can Be a Financial Drain
Rental properties should bring in a profit, but they can easily make you lose money. Maintenance expenses are a major drain for older properties, especially those that need to be brought up to current codes and that are not holding up well with recent weather extremes. Even newer houses can have maintenance problems due to poor construction or misuse by tenants. If repair costs have eaten a hole in your wallet, it may pay for you to sell the property. Chances are there is someone waiting for a home they can essentially rebuild, and your fixer-upper would be perfect for them.
Property Taxes Can Eat Into Your Earnings
Property taxes can also be a drag. For example, the Denver Post reported in April 2017 that Coloradans paid some of the lowest property taxes in the country, but then two weeks later, the paper reported that Denver property taxes would increase by as much as 40 percent over the next two years. If tax increases have made your rental profits shrink too much, selling the rental property should be on your radar. The market does go up and down, and those big increases might not continue. But it's not that easy to predict, and selling now may mean more relief for you than waiting for taxes to stall and the market to slow down.
Legal Problems Can Eat up Your Time
And then there are the legal hassles. Everything from finding new renters to dealing with misbehaving neighbors can take up your time and money. Some property owners luck out and rarely have to deal with these issues. Others have to deal with them too much for their tastes. By selling your rental property, you wash your hands of these problems.
Rental properties can be a wonderful way for some to increase their passive income. For others, however, the problems vastly outweigh the benefits, and selling those rental properties may be best. For those who don't want to deal with the long process of selling to another private party, a property buying service could be a helpful alternative. Reach out to a property buying service if you are interested in selling properties for cash.