When to Sell Your Home as an Investment Property

by Barbara Rybicki 10/18/2021

If you’re a homeowner considering selling your home as an investment property, timing is important. From a financial perspective, just as you probably bought strategically, you want to sell strategically too. The trick is knowing when the right time arrives. Here are four common metrics people use to determine when it's time to sell their property.

Amount of Equity in the House

A primary factor to look at is how much equity is in the home. Ideally, to sell a home as an investment, the seller can make a tidy sum. If mortgage payments are still owed, this may negate any potential profit made, but not necessarily. If you're looking to broaden your investment portfolio, be certain you can sell your house for enough money to pay off your debt with a sufficient amount left over to re-invest. If you don’t have enough equity to do this, you’re better holding off.

Market Conditions Are Good

Many owners who bought low and can sell high find this to be a strong motivator to put their property on the market. Since market conditions eventually shift to a buyer’s market, it’s a smart strategy to sell when the housing market favors the seller. Owners who have held their property for a long time or purchased as the housing bubble burst between 2007-2012, are likely going to make a better profit than investors who purchased when prices were at their peak.

Tax Code Advantages

Buyers are often motivated to sell if there are tax code advantages. For instance, the IRS currently offers a tax-deferred advantage to investors looking to sell one property to buy another. Under tax IRC Section 1031, sellers are required to find another property to purchase within 45 days and then buy it within 135 (180 days total).

By selling and making a similar real estate investment, investors can defer paying their federal and state capital gain taxes. It’s a good strategy to use if you want to leverage real estate and broaden your portfolio.

Taxes Are Going Up

If local taxes are going up, often buyers find this to be an incentive to sell. For instance, if a town severely limits commercial activity, the tax burden falls to homeowners. Over time, the tax bill may become too exorbitant. If you own enough equity in your property and the housing market is in your favor, high taxes might be your tipping point.

About the Author

Barbara Rybicki

I am originally from Poland but have been a Grafton resident for almost thirty years.

I come from the Hospitality Business. I used to work in 5 Star Marriott Hotel Management. That experience taught me how to provide excellent customer service. That "Marriott" way of doing business instilled in me over the years helps me tremendously to succeed as a local real estate broker.

Nothing is more exciting to me than gratifying feeling I get from helping people reach their real estate needs and dreams. You can count on me to always do what is in your best interest. I will be there for you throughout the entire transaction making sure you understand each step of the buying or selling process. I will guide you with great communication skills and hard work ethic.

I have not only passion for my job but also extensive real estate expertise. Whether it is preparing and staging your home to sell for top dollar or helping you purchase a perfect home, feel free to reach out to me so we can start this process together.

I specialize in marketing and selling residential real estate in Grafton, Upton, Northborough, Westborough, Southborough, Shrewsbury, Milford, Hopkinton and Metro West area.