In the event you Sell Your Investment Property?

Using the Prime Directive of "buy low, sell high" laid aside, most investors grapple with when you should sell.

USA, AL (prHWY.com) November 25, 2012 - USA, Nov 25, 2012 - The best reason for investing in real estate would be to make money. I make this statement with no apologies, though it sounds greedy; however, real estate property is like any other investment -- whose primary purpose (at least should be) should be to build wealth. Thus -- there ought to be a time in the foreseeable future that the investor intends to sell.

Kios - Using the Prime Directive of "buy low, sell high" laid aside, most investors grapple with when you should sell. There are several sell points real estate investors needs to have in their strategic business plans. Planning to the long run, investors may want to sell after having reached one of the following benchmarks: the property has maximized its profit, you've located a much better investment opportunity, the tax depreciation limit may be reached, or you've realized your wealth-building goals.

Maximized Profit

In many markets, there is a time once the profit is maximized and your rate of return drops. If an investor fails to monitor the local economy, he might miss the optimum time to offer a house and lose profit. If you've tracked the expense of housing across the nation, you'll find that it's rarely dropped from a single year to another. However, real estate is sold and held locally, thus the value of real estate property may slide in a local market than on a national scale.

Maximized Depreciation

Property investors are allowed to depreciate their properties for 27.5 years while they possess the house as being a rental. Depreciation can also add losses to your income on paper and thus, reduce your tax burden. Only the improvements (house, sheds, etc.) are depreciable, not the land. The IRS allows depreciation for up to 27.5 years for most investors, in accordance with IRS Publication 946 - How to Depreciate Property. Once you have hit the maximum depreciation, some of your tax benefits disappear and it may be time for you to find another investment property. When you purchase another property, the 27.5-year timeline begins anew.

Cash Out

Finally -- the ultimate reason behind all this investing, collecting rents, fixing leaky roofs, and broken hot water heaters, should be to create wealth. At some point, you are going to wish to cash out the property so that you can send your children to college, purchase a retirement home with cash, take that round-the-world cruise, or whatever you want or need, to deal with.

When you approach investing, make sure to start with the end in your mind -- thus understanding when you need, and really should sell to maximize profit.


About the Author:

Kios - Kios LLC provides affordable homes for Central Florida residents. The company was formed in 2009. Kios LLC owners have a combined experience of 25 plus year in Real Estate Investing and 7 years in Mortgages. We find and qualify buyers that have been negatively impacted by our current economy, and then find a property that meets their needs. As skilled bank negotiators, we at Kios LLC can find short sales for new buyers and negotiate loan modifications.

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