When Should You Consider Selling Your Rental Property?

By Tim Lockhart

Tim is a 6th generation Texan, grew up in Arlington TX, and after having served 20 years as an Air Force Civil Engineering officer and managing over $1 Billion in facility construction and renovation projects, he retired in 2013. The experience, work ethic and leadership gained in the Air Force propelled him in only 4 years to build a real estate business ranking in the top 20% of agents worldwide in Keller Williams Realty the #1 Real Estate Company in the World. Tim is a Certified Military Relocation Specialist providing the highest level of service to his clients.

When does it make sense to sell your rental property? Owning a rental property can be a rewarding investment, but there may come a time when selling becomes the best course of action. As real estate agent, we’ve counseled many landlords on what the best course of action is when thinking about selling. Here are three of the most common signs that it might be time to sell your rental property:

1. Declining cash flow. One of the key benefits of investing in real estate is generating passive income. If you find that your rental property’s cash flow is declining or becoming negative, it could be a sign that it’s time to sell. Rising expenses, such as maintenance costs, property taxes, or vacancies, coupled with stagnant or decreasing rental income, can erode your profitability over time. Selling the property allows you to liquidate your investment and potentially reinvest in a more profitable opportunity—in real estate or otherwise.

2. Market appreciation. Recently, property values have increased all across the country. If you are looking to liquidate your asset and maximize your profit, selling and getting access to your equity might be the best course of action. Listing during the right time can yield a higher sale price and maximize your return on investment. From there, you can reinvest the funds into another investment and continue the cycle.

3. Changing goals or life circumstances. Your investment goals and personal circumstances may evolve over time. If your rental property no longer aligns with your financial objectives or lifestyle, it might make sense to sell. For example, if you’re nearing retirement and prefer to simplify your investment portfolio or reduce management responsibilities, selling your rental property can provide liquidity and peace of mind. Many landlords use a strategy where they keep a rental until the mortgage is paid off, sell, and reinvest the funds elsewhere. If you’re using this strategy, there will naturally come a time when it makes sense to sell.

Ultimately, deciding when to sell your rental is a deeply personal decision, and there isn’t a definitive right or wrong answer. That being said, we’ve helped many landlords make this decision in the past, and we know what people in your position have done before. If you have questions about selling your property or anything else, please call or email us. We look forward to hearing from you!