Investment property owners have different reasons for selling, but some may fail to see the big picture and miss an excellent opportunity to sell.
I’ve counseled many investors on both sides of the decision-making process: wanting to sell, but missing the opportunity or having the opportunity, but missing the time to sell.
It may be time to sell when…
…planned or unforeseen circumstances of life come into view such as retirement, divorce, the death of a spouse or a relocation.
…you are tired and frustrated and have had enough dealing with problems, putting out “fires,” and are frustrated with the tenants’ needs.
…you secured that new tenant you have been working on, executed a new long-term lease and solidified the value of your property.
…your gut tells you your investment is too risky and after looking at all that can go sideways with your property you weigh this against the rewards and find the risk is too great.
…the replacement, maintenance and reliability model is no longer in your favor and replacement of many of the major building systems is expected within the next five years.
…major upgrades to comply with the ADA (American’s with Disabilities Act), fire codes and seismic upgrades are needed.
…the loan you secured ten years ago is coming due, and it is time to refinance or make a large balloon payment, which is something you do not desire to go through or have the funds to execute.
…you and your partners have grown apart because of your differences with the property, or it is just time to move on.
…you died, and your children inherited the property, and they want to sell because as your heirs they receive a step-up in the basis and can sell with no capital gains taxes.
…you realize you would make a hefty profit, so you perform a 1031 tax-deferred exchange into two properties thereby growing your portfolio.
….your portfolio is heavy in one property type or location and as part of your rebalancing strategy decided to diversify.
…you realize it is time to execute your philanthropic goals and donate one of your investment properties to charity thereby achieving a positive tax strategy.
…you know you are paying too much in taxes and could purchase a higher-value property with a more considerable amount of depreciation allowing you to reduce your taxes.
…you realized for one reason or another you should have never purchased the property in the first place and want to get out while you still can.
…you have an anchor tenant whose lease is coming due in about five years, and you realize finding a replacement tenant will be nearly impossible.
…you need the money or in diversifying your portfolio and would prefer to have more of your assets in cash.
…it would be plain stupid not to because the market is hot and you will make a huge windfall.
If this is you give me a call.
Burt M. Polson, CCIM, is an active commercial real estate broker. Reach him at 707-254-8000, or [email protected] Sign up for his email newsletter at BurtPolson.com.