When Is It The Right Time To Sell Your Rental Property?

One of the smartest things you can do as a real estate investor is to get into the habit of periodically evaluating your options: buy, hold or sell. This is especially true if you’re building your real estate portfolio as a primary investment vehicle that you’re hoping will fuel your children’s education or your retirement.

There’s rarely a clear “right” answer when it comes to managing an investment, which is why it’s important to consider what makes the most sense for you and your financial goals on an ongoing basis. Here are some questions to consider.

Could the money you’ve invested in your rental property be earning higher returns elsewhere?

While you’d need a crystal ball to answer this one with 100% accuracy, you should be able to make an educated guess. For example, if you own a property in a town whose biggest industry is dying or in a place where a major employer has announced plans to relocate its headquarters, there’s a good chance your ability to earn money from that property will diminish in the coming years.

In that scenario, it may make sense to sell the property and reinvest the proceeds elsewhere.

On the flip side, if you bought a property years ago in an area that’s now gaining popularity, you’re likely well suited to hold the property and enjoy higher rent prices.

Do you need money right now (or will you soon)?

Whether you need a cash infusion to pay for a child’s tuition or a major medical procedure, it may make sense to sell a property rather than take on debt. Real estate is one of the most illiquid investments out there, so if you know you’ll need actual cash in the near future, selling the property and stashing the cash in an easy-to-access investment fund or savings account could prove beneficial for your long-term finances.

Could you realize a significant tax benefit from selling (or buying) a property?

This is especially important to consider in the wake of the tax law that passed last year. It’s also pretty complicated. Briefly, you should be aware of a few items in the tax code that could make it more (or less) beneficial to buy, sell or hold a property:

• Depreciation: The IRS gives you the option of claiming depreciation benefits of your rental property as a way of reducing your tax burden. If claiming depreciation benefits can lower your effective tax rate, it may make sense to hold.

• Section 1031: This section of the tax code, also called a “like-kind exchange,” lets you avoid paying capital gains taxes on income from selling a rental property, as long as you buy another property within 180 days. Note that taking advantage of this benefit requires you to follow a lot of detailed rules. If you’re interested in learning more, get on the phone with your CPA.

• Reduced benefits for homeowners: The new tax code offers fewer tax incentives to own a home, which means people on the fence about buying may choose to rent for longer. This could make it a great time to buy additional rental properties if you’re in a position to do so. Keep in mind, though, that the rental market varies around the country, so the changes may have more impact on renter behavior in some places than others.

Is maintaining the property becoming a drain on your lifestyle?

Whether you’ve retired to travel the world or you just don’t feel like managing your properties anymore, it’s possible to outgrow real estate investing. But before you sell because you’ve had enough of the backend work, consider lightening your load by automating as much as possible with software that handles a lot of the paperwork you’d otherwise have to do.

Unless you really don’t need the income your rental property provides (and you can’t imagine that any of your descendants will, either), it may make be worthwhile to adjust your management style and continue bringing in the monthly rent.

Should Sell Versus Need To Sell

One final thought: In some situations, you need to sell an investment property. These situations are usually not predictable — maybe you lose your day job and you can’t keep up with the mortgage anymore. Not selling the property would create an acute financial lack that would significantly impact your life.

In other situations, you probably should sell the property. Maybe it’s in a town with a dwindling population where property values aren’t rising. In these situations, you won’t notice any day-to-day urgency around whether you hold or sell the property, even though you could be earning greater returns on your money elsewhere. When you absolutely need to sell, you won’t have to go through a list of questions to make your decisions; the decision will be made for you. Being alert to when you should sell, though, can help ensure that you’re making the most of the funds you’ve earmarked for investment.

Authored by Ryan Coon Ryan is a contributor to Forbes Real Estate Council and Co-Founder and CEO of Avail, the only all-in-one software solution designed for do-it-yourself landlords.. Published, Forbes, 7/23/18.
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Copyright 2018 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this.
Copyright 2018 NATIONAL ASSOCIATION OF REALTORS®

Here's some easy improvements that don't crush the budget.

Pulls and Knobs Open the Door to a New Look

Published: August 19, 2016
Repair and replace door hardware that makes rooms look dingy and outdated. We’ll show you how door and cabinet pulls, knobs, and hinges can give your home new sparkle.
You can slam cabinet and bedroom doors only so many times before you have to repair and replace hardware that is loose, broken, or just plain old and tired. It doesn’t take a lot of time or money to tighten loose hardware, clean globs of paint off a hinge, or replace cabinet pulls to brighten any room in the house.

Repair and Replace Kitchen Cabinet Hardware

Replacing or repairing knobs and pulls on cabinets and drawers is a quick way to give your old kitchen a new look.
Cabinet hardware can be simple or ornate, and ranges from $1 a knob to $45 or more. Here’s your game plan:
  • Repair loose knobs and pulls by tightening holding screws, replacing stripped screws, or plugging gaps with wood filler applied with a putty knife.
  • Count the number of knobs or pulls you need before you head to the hardware store. Estimating will cost you time and money.
  • To replace pulls, which are attached to cabinets by a screw at each end, measure the distance between holes -- not the length of pulls -- to assure a perfect fit.
  • If you’re switching from a two-hole pull to a one-hole knob, choose hardware with back plates that cover door scratches and holes.

Tighten, Polish, or Replace Door Hardware

Nothing ages a room like a loose doorknob. You can tighten mortise-style doorknobs by simply tightening the setscrew on the side of the doorknob. For cylindrical doorknobs, you’ll need to take the doorknob apart.
Replace dated doorknobs with sleek door levers. For easiest installation, choose a lever handle lockset made by the same manufacturer. Prices range from $20 to $160.
Buy a commercial polish, such as Wright’s or Weiman, to make brass doorknobs shine. Warm water and a little dish soap or a homemade paste of equal parts vinegar and baking soda will scrub off dirt and make stainless steel and glass doorknobs sparkle.

Clean or Replace Door Hinges

Telltale paint on door hinges says someone did a sloppy job. To restore hinges, try these techniques:
  • Wash with sudsy hot water.
  • Scrub with a nylon brush or a toothbrush. A wire brush could damage the finish.
  • Brush on paint stripper that is safe for all surfaces.
  • Polish with beeswax furniture polish or brass polish.
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Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®
Planning on Selling Soon? 
Do's and Don’ts of Homebuyer Incentives.


Homebuyer incentives can be smart marketing or a waste of money. Find out when and how to use them. Be sure you’re sending the right message to buyers when you throw in a homebuyer incentive to encourage them to purchase your home. When you’re selling your home, the idea of adding a sweetener to the transaction -- whether it’s a decorating allowance, a home warranty, or a big-screen TV -- can be a smart use of marketing funds. To ensure it’s not a big waste, follow these do's and don’ts:

Do use homebuyer incentives to set your home apart from close competition. If all the sale properties in your neighborhood have the same patio, furnishing yours with a luxury patio set and stainless steel BBQ that stay with the buyers will make your home stand out.

Do compensate for flaws with a homebuyer incentive. If your kitchen sports outdated floral wallpaper, a $3,000 decorating allowance may help buyers cope. If your furnace is aging, a home warranty may remove the buyers’ concern that they’ll have to pay thousands of dollars to replace it right after the closing.

Don’t assume homebuyer incentives are legal. Your state may ban homebuyer incentives, or its laws may be maddeningly confusing about when the practice is legal and not. Check with your real estate agent and attorney before you offer a homebuyer incentive.

Don’t think buyers won’t see the motivation behind a homebuyer incentive. Offering a homebuyer incentive may make you seem desperate. That may lead suspicious buyers to wonder what hidden flaws exist in your home that would force you to throw a freebie at them to get it sold. It could also lead buyers to factor in your apparent anxiety and make a lowball offer.

Don’t use a homebuyer incentive to mask a too-high price. A buyer may think your expensive homebuyer incentive -- like a high-end TV or a luxury car -- is a gimmick to avoid lowering your sale price. Many top real estate agents will tell you to list your home at a more competitive price instead of offering a homebuyer incentive. A property that’s priced a hair below its true value will attract not only buyers but also buyers’ agents, who’ll be giddy to show their clients a home that’s a good value and will sell quickly.

If you’re convinced a homebuyer incentive will do the trick, choose one that adds value or neutralizes a flaw in your home. Addressing buyers’ concerns about your home will always be more effective than offering buyers an expensive toy.

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Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®

Observations From The Field

What's Going On With These Prices?

If you've been casually paying attention to the real estate market this year you've probably noticed or heard about the price gains in much of the metroplex. The latest figures are showing the median home price in May was at $204,900, up 5.1% from April. Wow! I noticed it starting to climb rapidly from about February; 1st about 2%, then 3% in March with a steady climb ever since. North Texas Real Estate Information Service has reported an 11% over-valuation of real estate here and clearly with the additional job growth coming with companies like Toyota relocating here, limited inventories of existing homes and slow building of new homes, we will continue to see much of the same. Most of the country is experiencing similar growth and while The National Association of Realtors reported last month that this is not another bubble, I would say hogwash. This is the kind of rapid growth that causes bubbles the worst. Just look to California for a stellar example.

That being said, what is a good course for existing homeowners and first time home buyers right now? Well, it all depends. If you're an existing homeowner and don't have a compelling reason to move; i.e., enlarging family, job transfer or pre-retirement down-sizing, then staying put and letting your equity rise with the tide may be enticing. Home buyers have been in a frenzy lately trying to take advantage of some of the lowest interest rates in years, which is fueling the price increases even more. If you're looking to take advantage of low interest rates but are stymied by the crazy competition in some North Texas areas, be sure you are adequately funding your offers to the sellers. Cash is king so make sure you have plenty of down-payment money on the line so the seller knows you are serious and well qualified. There is nothing worse than to have a contract fall apart because underwriting decides in final review that your cash position is too weak to support the loan. Everybody loses in that scenario, so sellers in a hot market will take the offer that has the most money for down payment; 20% or more is the rule for a winning offer in this environment. A 20% down payment resolves most of the risk for a lender so underwriting is usually a breeze. So with as many as 20 -25 offers for homes, many times in the first week or two, sellers are selecting only the strongest offers, not necessarily the highest.

And a word or two of caution on refinancing your current home to take advantage of the low interest rates. For many years Texas restricted refinancing so as to protect homeowners' equity positions but that all went out the window some years back with aggressive lobbying and a less than fiduciary minded state legislature. There are some smart ways to refinance and some not so smart ways. If you want to lower your payments, refinance only what you owe for a 10-15 year term. Often I see homeowners that refinance the full allowable value (80%) at 30 years so they can take out cash for remodels, college tuition, etc.  But here is the rub on that score. The lenders will often encourage a full allowable loan and to up the ante a bit, the home's value is scored a bit higher in order to sell you on more loan. Though appraisal standards have tightened somewhat as a result of the bursting in 2007-2008, it is rapidly going back to the same old game. So when the market adjusts; glub, glub, glub, you're under water. For some of you that remember the 1988 real estate bust, I know many of the same factors were at play as with the most recent bust. Adjustable Rate Mortgages and lax lending practices had a lot to do with the bubble in 1988, just as they did in 2008.

Where Are The Best Values Now?

Certainly some of the better values for the money are in the areas of lesser demand. Of course, depending on where you work you'll want to consider the commute times into your value equations, but certainly areas away from the mainstream can offer the best deals. And you don't have to go out as far as Greenville to get them. Many existing and newer developments east and northeast offer great deals for downsizing or growing a family. Communities like Garland, Mesquite, Forney, eastern and southern Dallas areas like Casa View and Oak Cliff all have some terrific neighborhoods with affordable housing and reasonable commutes.

And if you're at or approaching retirement age and are wanting to downsize to reduce your overall expenses but stay near good medical facilities and metropolitan amenities, exploring the area a bit to see what the rest of the metroplex might offer should give you some good ideas. You never know, you might even find a really great restaurant or two along the way.

Best Regards,
Greg 

Spring is settling in nicely and a lot of us are looking at spring projects around the house. If you've read through some of the articles I post from HouseLogic by the National Association of Realtors® you have probably found a few good ones to help spruce up a bit. This month's article deals with some simple and inexpensive things to help with counter tops.  Additionally you may be interested in browsing through HouseLogic's library for back splash ideas that can really help spruce up an old kitchen as well as cabinet refreshing ideas. When I'm showing clients older homes a lack of updates in a kitchen stick out like a sore thumb as needing attention and sometimes signaling neglect. Conversely, freshly painted or oiled cabinets and a new back splash helps show that the kitchen has some updates and the owner/seller care about the most frequently used room in the home. 

Of course new appliances and tile flooring always help, but as a bare minimum one can freshen up the counters, cabinets and back splash for a very appealing presentation at very minimal costs. Several local building suppliers offer a wide variety of back splash options you can do yourself. 

Check out all of HouseLogic's resource materials below and enjoy your spring projects! And as always contact me should you have any questions.

Best Regards,
Greg


Granite kitchen counter

Kitchen Countertop Triage: First Aid for Scratches

You can repair kitchen counter mishaps with only a little time and money. Big boo-boos, however, will need professional help. Read











Housing Trends March 2015 Newsletter

Check out the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general. 

Please click on this link to view the Housing Trends March 2015 Newsletterhttp://gkf.housingtrendsenewsletter.com 

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources. 

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports. 

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report: 

http://gkf.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0 

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future. 

Sincerely yours, 

Greg Foster

Dallas Among Hot U.S. Markets

Realtor.com: Waco & Dallas Hottest U.S. Housing Markets


It's certainly shaping up to be a hot spring housing market.  A lot of competition for the good ones, keeping housing prices strong.  The dogs are still sitting on the sidelines a while, but they too are finding buyers, though many of the millennials buying for the first time have begun slowing due to frustration in competing for the good ones.    - Greg
Realtor.com has determined the current top 20 U.S. housing markets, and Waco sits at the top of the list, followed immediately by Dallas.  Analysts with the website used last month's housing data to compile the list, examining the median age of February housing inventory as well as traffic on Realtor.com.
Writes Jonathan Rienstra on CultureMapAustin, "Active Waco listings on Realtor.com are viewed, on average, 335 times — the highest in the country. Dallas comes in second, at 219 pageviews per active listing. To put that in perspective, the national average is 73 pageviews per active listing.
"The median age of housing inventory in Dallas-Fort Worth is 62 days. That’s the best in Texas — and 41 days shorter than the national average of 103. Although Waco doesn’t appear in the top 20 on that list, it earns the title as hottest projected market because of online activity."
No other Texas cities landed in the top 20.    - Real Estate Center, Texas A & M

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Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

Winter 2015 Roaring Away!

Mortgage Interest rates are staying very low, building more enthusiasm to upsize and downsize.  Still below 4% for a 30 year fixed rate, but lower inventories continue to drive prices up a bit. There is a flood of buyers on the market to take advantage of low interest rates. But most people are not wanting to move, enjoying some stability over the last 3-4 years that is now driving prices with a reported increase of about 10% in existing homes since last year. 

It certainly appears Spring 2015 will be very brisk.  And these last few weeks of winter are bringing N. Texas our annual bit of ice and snow, so we're all catching our breath. Of course, next week Spring will be in the air again I'm sure with many busy weeks ahead. 

So while you're spending more time indoors, you might enjoy organizing your garages. Here's some money saving tips from House Logic to enjoy ...
Greg
Holey Rail garage organizer 

Garage Organization Ideas for Under $50

If clutter trumps cars in your garage, get organized (and make room for your vehicles) with these smart garage storage solutions, each costing less than $50. Read
Visit houselogic.com for more articles like this.
© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

A week In Autumn 2014


    For those of you living in the DFW area, the last couple of weeks have been interesting. The Ebola mess is getting crazy, and of course we are now getting assurances from federal reps, state reps & Rick Perry that all is well in hand. Even Judge Jenkins personally drove  the family of the infected man to a gated community (lucky neighbors) for quarantine and is telling us not to worry. That and a buck-fifty will get you a cup of coffee I guess.
    But what really got me peeved last week was being without power for 24 hrs. as a result of a not so friendly Texas storm line. Funny how times have put us in a state of mind that without digital access and electricity we can feel quite crippled.  I had to remind myself of the months I lived off the grid a bit in an Arizona desert, the river trips with just my kayak and a few power bars for a few days at a time or the many military exercises where a hot meal was a once a week affair.
    I actually went 24 hrs. without my coffee fix during this power outage. Unbelievable! I did have access to my smartphone, but charging required use of my auto battery. Oh, how that air conditioning feels so good now!  And with fall upon us well we can open the doors and windows for a change.
    You may enjoy reading this Housing Trends eNewsletter that our National Association of Realtors puts together.  Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLS providers and the National
Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports. Please click on this link to view the Housing Trends September 2014 Newsletter. You’ll also find a mortgage calculator when you click on the “My Site” bar in the header. http://gkf.housingtrendsenewsletter.com
     Have a great Autumn and as always, call or email if you ever have questions I can help you with.

Sincerely,

Greg