Should I Sell or Should I Hold?

Should I Sell or Should I Hold?

Every day we get this call here at Security 1st Exchange. “I have my rental and I don’t know if I should sell now or wait until interest rates drop. What do you think?”

Our answer is always the same. You should speak with your tax advisor, your financial advisor and your real estate professional to come up with a plan on when to sell. But let us give you some things to think about:

1. Are you moving and want to move your rental property to your new city? That is a common situation as most investors do not want to manage a rental property from hundreds or thousands of miles away. In today’s market, you can find some good properties, but as we all know, interest rates have gone up and you must take that added cost into consideration.

Some 1031 Exchangors own their Relinquished Property free and clear of debt, so they will not be acquiring debt on the Replacement Property. In that case, the decision may be easier.

2. Are you overburdened by taxes or regulations in your state? There are some states where taxes or rental laws on landlords have made being a profitable landlord challenging and you may want to move your investment properties to another state. In a situation like that, 1031 Exchanges can definitely be a useful tool.

3. Can you find properties you want in your new location? We always recommend to look at what is available in the new city before selling your investment. If you cannot find properties you like at this time in a price-point you are comfortable with, then today may not be the right time to sell.

These are just a few things to think about before selling and doing a 1031 Exchange. We have clients that are still selling and purchasing property today through the 1031 Exchange because they know now is the right time. With your team of advisors (including Security 1st Exchange as your Qualified Intermediary), we are sure you will make the right decision in your specific situation.