If you are a real estate investment property owner, you should have a professional analysis performed each year. A licensed real estate agent can perform the analysis to determine how much your property is worth and if your monthly rent is in line with market value rents. Considering selling? This information will allow you to make a sound business decision before moving forward as this spring might actually be the prime time to sell your investment property. Your decision will depend on the analysis, your rent and whether or not you are planning to be a landlord for the long-term.
Real Estate Investors by Default
Some homeowners became investors in the years following the 2008 crash because they were underwater when it came to the value of their homes. This happened practically by default. These owners were planning on selling their homes for various reasons, but when they consulted with real estate professionals and found out their homes were worth less than what they owed on their mortgages, they decided to hold on to these properties and rent them. This move was very lucrative for most of these homeowners.
Home values have increased by double digit percentages year-over-year over the past couple years. For example, in an article on Realtor.com written by Michael Hyman on May 9, 2022, he states, "The National Association of REALTORS reported that home price growth remained strong for the first quarter of 2022...National median prices rose 15.7% year-over-year to $368,200." Most real estate professionals are predicting that the real estate market has seen its peak. The market is going from a super sizzling seller's market to a more balanced market already. Prices are predicted to hold steady or perhaps even go down a little in 2023. Some markets are predicted to have home values rise a few percentage points this year. It may be a perfect time for these homeowners or real estate investors by default to sell their properties.
Short-term Investors
During the years that the real estate market crashed and for the years following, while the market was coming back to life, many investors decided to add real estate investment properties to their investment portfolios. Some of these investors decided to become landlords for the short-term, with hopes to make some decent money in just a few years. This move was a smart one for many who had this plan. They bought the properties for low prices and have been able to watch the values rise over the past few years. Since the real estate market has hit close to the top in terms of home prices, this spring is a good time to sell for these short-term investors.
Investors for the Long Run
Yet another segment of the market were investors who decided to become real estate investors for the long run. If their returns on investment (ROI) are still positive and their monthly rental prices are considerably higher than their monthly mortgage payments, and they do not need to sell soon, they would logically be less likely to sell now. The key words are that they "do not need to sell." These professional investors have enjoyed not only their home prices rising but their rents rising. These real estate investors can hold onto their properties for a long time and continue to reap rewards. Even if the market goes down and becomes a buyer's market for a while, if they retain their properties, they can sell in the future when prices come up again if they decide to.
As always, it is best to consult a real estate professional if you are thinking of selling your investment property or properties. They can prepare a complete market analysis and ROI for you and give you their professional advice and opinion in your particular market. Be sure to find an agent who is experienced with investment properties.
