Every investor has different goals for their rental properties. Hopefully, you have a written set of metrics and criteria that help you evaluate when your property isn’t performing the way you expect it to.
Often, you can make improvements to your property that may increase the rental value or attract better tenants, leading to a more successful performance. But, sometimes you need to move beyond the property that isn’t doing what you expect it to do and buy a different one.
Here’s how you know it’s time to switch out your old Grand Rapids rental property for a new one.
Your Investment Goals are Changing
If a particular property does not meet your investment goals any longer, it’s time to look for one that does. Perhaps you’ve decided to diversify your real estate investment portfolio, and you want to move from owning single-family homes to investing in multi-family properties to protect yourself against vacancy risks. In this scenario, you’ll want to sell your homes and begin looking for multi-family units or even apartment buildings.
Reviewing your investment goals from time to time is an important way to stay on top of shifts in the market and in the performance and strength of your portfolio. Make. Sure your current assets meet your needs and help you move closer to your goals.
You Struggle to Find and Retain Tenants
It’ impossible to succeed with a rental property if you can’t find tenants willing to live in it. When you see your vacancy rates increase or your vacancy times are longer than normal, it might be a good idea to look for new opportunities.
Lots of tenant turnover can also send a strong message. If your tenants are not renewing their lease agreements, you’ll have to sink a lot of money into finding a new tenant. A profitable rental property is attractive to good residents, and it’s easy to keep them in place when you’re providing a great rental experience. If tenants don’t want to stay in. your home, it might be a good indicator that you need to switch out that property for one that’s more appealing to good tenants.
Maintenance Costs Are Rising
Many real estate investors are seeing their maintenance costs go up. The cost of labor and supplies has risen, and there’s more of a demand for renovation and rehab work. Al of that is normal, especially in the current market.
However, if things in your rental property are breaking down and deteriorating faster than they should, you don’t want to continue sinking money into the property. Instead, you can save those funds and put them towards a new investment instead.
If you’re wondering how to switch one rental property for another, the easiest way is with a 1031 exchange. This will save you money on taxes and allow you to strengthen your entire investment portfolio.
We’d be happy to help you make these decisions. If you contact us at Short South Management and Development, we can walk through some options with you.