sell

Should You Sell Your Rental Property? Five Good Reason's When To Sell Your Rental Property.

are you a rental property owner i am are

you thinking about selling your rental

property or properties

that can be a difficult question moving

forward because there are so many

different moving parts

we're going to talk about the five

different reasons when it makes sense to

sell your rental

starting right now

[Music]

hello and welcome my name is albert

pereira but you can call me al

i am a veteran realtor of 25 years

living in beautiful kamloops british

columbia

and i too own rental properties in this

video we're going to discuss

the difficult question about whether or

not you should sell your rental

or rentals and i know there's a lot of

conflicting advice out there

but there are five very valid reasons

when it makes sense

to sell your rentals now before we get

started

please be reminded that i have a passion

for selling

real estate and when it comes to helping

buyers and sellers of investment

property

i have many many years of experience and

a lot of my own hard-earned experience

in the rental business as well

so if you're looking to sell your rental

property please reach out to me

in the show notes below or at the end of

this video

for my contact information i'll be able

to provide you with

a free market evaluation and a

plan to maximize the return on your

investment

for the rental properties you decide to

put onto the market

and i'll be happy to discuss that with

you when you reach out to me

let's get started number one in terms of

reasons when it makes

sense to sell your rental property is

that the property is cash flow negative

and you are contributing constantly to

maintaining the property or maintaining

the overall

cost of keeping the property because the

property is cash flow negative

now i know this is a common strategy in

a lot of larger cities

but in kamloops most of the investors

i've ever worked with

were in cash flow positive situations

but

if you're constantly subsidizing your

renter in the hopes

that huge capital gains will come down

the road you may want to consider

selling your property

especially if it has already appreciated

a great deal

and you feel that that appreciation

might be something you want to take

advantage of now but holding

a cash flow negative property when you

feel like a lot of the appreciation has

come

and you don't see a lot of appreciation

on the horizon that's a good time to

consider selling

number two is when you've had such

tremendous appreciation of your rental

property

that the cap rate has changed so for

instance

if you bought a house in kamloops

for a hundred thousand dollars many

years ago and the rent at that time was

eight or nine hundred dollars

and your cap rate that is the return on

your investment

was somewhere in the neighborhood of

between seven and eight percent

after expenses then you're getting a

great return on investment

but perhaps you have the same home now

and it's worth five hundred thousand

and you're only getting fifteen hundred

dollars for rent that

means your cap rate is far lower than

when you started out

and you have a lot of capital gains and

appreciation

that you can cash in on if you choose to

do so

now does it make sense to sell when

you've got all this appreciation on the

table

it does but only if you're looking to

make your estate more easy to transfer

to your errors or if you've got

somewhere else to deploy deploy the

money at a higher rate of return

so keep in mind that the cap rate that

you bought originally

is perhaps not the cap rate that you

have now because the property has

appreciated

a great deal now that's a good problem

to have but you have to

accept the fact that the cap rate that

you have then had then

is no longer the cap rate and return

that you're getting now

on the money that's tied up in that

property

[Music]

stepping up and redeploying and this is

one of my favorite strategies

in that if you're a smaller landlord and

you're looking to step up

perhaps you have a condominium now and

it's not cash flow positive

and you want to step up into a duplex or

a four-plex

and your chances of being cash flow

positive are far greater there

well then it makes sense to perhaps step

up and sell the condo

now if you're more of a landlord with

lots of different properties that is in

the three to five range

you might want to sacrifice selling

three or five of your rentals

and buying an apartment block 15 units

is

preferable or higher and this is a

strategy that i have used in the past

with great success and i'm very happy to

own

those assets now now remember that

a lot of owners of rentals are

absolutely

livid about the thought of selling

rental properties

and you know i get that i understand

that because

a lot of them are great performers but

some of them are not so great performers

and there are some terminal problems

some location problems some issues

some things that just don't make it

convenient to own as a rental anymore

well you might want to sacrifice that

soldier or two

and get yourself a king or a queen in

terms of

more units under one roof because then

you have to worry about

five different furnaces five roofs five

fences and

you know the yard maintenance on five

different smaller rental properties

you buy one apartment block you have

one boiler you have a caretaker on site

to handle day-to-day problems

you have one fence one roof and when you

go

to your building that's all of your

rentals and you have a little office

there in case you need to do something

so leveling up always makes sense

especially

if it makes sense to you at that time in

your life

or for estate planning now if you need

to redeploy the money into another

investment altogether that's outside of

real estate which is going to be high

returning

that makes sense too but be careful

don't get out of something that you

understand into something you don't

understand where you lose a lot of money

the fourth reason that can make sense

for when you should consider selling

your rentals

is you're an out-of-town owner and

the property management and ongoing

issues with your rental or rentals

in your out-of-town market is no longer

favorable

or it's getting to be too much of a

hassle and sometimes

at distance your property managers don't

seem to do

as much due diligence in terms of their

tenants

because you're not close by or they're

not doing a good job filling

vacancies and when they do the tenants

are not great

this is a common theme and problem that

i've heard from many out of town

landlords and perhaps you're

experiencing the same issue

but if you see that the market that you

have invested in

is no longer appreciating or doesn't

have a great future

you may want to consider redeploying

that money once you sell that rental

into other investments or into rental

investments closer to home

where you have a much better idea of the

market overall

and costs for repairs maintenance and

tenant turnovers

but no one's going to take care of your

money more than you will

so if you can get closer in terms of

keeping your rentals closer to where you

live

you'll find that it's a big improvement

to your overall returns

moving forward number five and the last

item on the list of

reasons to consider why you should sell

your rental property

is regulatory changes and in british

columbia with this new government

we have learned that many of the

residential tenancy act rules have

changed and they are in favor of the

tenants

and this includes how much you can raise

the rent

every year because they're tying it to

inflation and as we know the inflation

numbers that we're given

in many cases are not reality so the

last time

we were allowed to raise rent was set at

1.4 percent

and that was rescinded during covet 19

so that there would be no increases

allowed

at all on existing tenants now

if you feel moving forward that 1.4 or

in that range

is fine for you as a landlord to

increase your revenue versus your

expenses

then you're probably in the minority

because most of us have

found out that our expenses are running

far higher in terms of increases than

1.4 percent

for instance in vancouver property taxes

alone

have increased somewhere in the

neighborhood about 18

in the last three years and you've seen

a lot of

property rental property come onto the

market for sale

as a result now we don't know what the

future tenancy

rules and laws are going to be but they

are

increasingly in tenants favors in the

tenant's favor because

there are a lot more tenants than there

are rental property owners

and they are voters so there is a

rental crisis that's the way it's been

described because there's not a lot of

rentals out there

in bc and i think

a lot of these regulations and rules

have

made it so that a lot of landlords have

gotten out of the rental game

and this has put pressure on rentals all

together

because it's less and less profitable

and

the less profitable you make it the

fewer rental units are going to be built

so you need to consider regulatory

changes in terms of keeping your

investment

and whether or not it's going to be a

worthwhile investment moving forward

over the long term now before you click

on the next youtube video

stop do not sell your rental properties

until you talk to your accountant

because you might have many many years

of

large capital gains on your rental

properties and you need to be aware of

the tax implications

and you cannot pull the trigger on

selling those rentals

until you're aware of those full

implications

so call your accountant before you pull

the trigger

i had a great time making this video i

love talking about investment real

estate and real estate overall

and i love talking to other landlords if

i can help you out in any way

please reach out to me in the show notes

below or at the end of this video

thank you for watching

you