15 Questions to Ask Yourself Before Selling an Income Property

Owning an income property is a great way to make money as a real estate investor. But there may come the point when you're ready to sell that property. Before you do, make sure to run through these important questions.

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You may be looking to sell your income property because you haven't managed to secure a steady stream of tenants. If that's the case, you may want to try different strategies before putting that home up for sale, like lowering your asking rent, offering concessions like free rent, or converting your home from a long-term rental to a short-term rental.

Being a landlord takes time and effort. If you're tired of that commitment, and that's what's driving you to contemplate selling your income property, you should know that you don't have to do all of the work yourself. Instead, you can outsource that work to a property manager. You'll lose some of your proceeds, but you'll free up a lot of time.

ALSO READ: 5 Mistakes Every New Landlord Makes

Homes tend to gain value over time. If you don't need money right away, you might enjoy more home price appreciation if you hang onto that property longer.

A lot of people are seeing their property taxes rise in the wake of higher home values. If yours have become unaffordable, then it could pay to sell your property and buy one in an area with lower taxes.

ALSO READ: How to Calculate Property Taxes

Homeowners insurance is a big expense property owners face. If your insurance costs keep rising, that alone could drive you to sell. Also, if you're being charged higher premiums, chances are it's because you've had to file more claims recently -- which could indicate that issues are brewing with your rental home.

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As homes age, the maintenance involved can increase. It could pay to sell your income property and replace it with a newer home that doesn't require as much work.

ALSO READ: Here's What the Average American Spends on Home Maintenance

If you sell your home at a time when a lot of other property owners are looking to go the same route, you might lose out on a better offer due to strong competition. In that case, it could pay to wait to list your home at a time when fewer sellers are unloading theirs.

You might sell your income property and score a lump sum of cash. But in exchange, you'll be giving up future profits. You'll need to make sure that won't wreck your plans before moving forward.

ALSO READ: 2 Real Estate Moves You Should Make for an Early Retirement

Although home values are up right now, in certain markets, they've risen faster than others. It pays to do some research before selling your income property. If you don't like the number you see, you may want to wait.

Selling your income property could put you in a position to make money in other ways. You can take that money and use it to buy a different income property or invest someplace else, like REITs.

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If you have to hire a real estate agent to sell your income property, you're going to lose a chunk of your sale proceeds to their fee. Make sure to factor that into your decision.

ALSO READ: Can You Negotiate Real Estate Agent Fees?

If you're thinking of selling your income property to free up cash, you might consider borrowing against it first. If you have enough equity, you might snag a fairly affordable interest rate on a home equity loan or line of credit.

Listing your income property at the right time could lead to a higher offer. If your home has a lot of curb appeal, for example, you may want to list it during the spring, when you can really show off your landscaping.

Owning an income property could be a liability in retirement -- or it could work to your benefit. The rent you collect could serve as a backup source of retirement income, which is a nice way to supplement your Social Security benefits. Or you may want to use that property as your primary home once your career comes to an end.

ALSO READ: 3 Reasons You Need Savings to Supplement Social Security Benefits

Selling an income property could result in a sizable capital gains tax bill for you. Before you make that listing official, it pays to sit down with an accountant and figure out what repercussions you'll face from a tax perspective.

The decision to sell an income property is a big one. Before you finalize your choice, take the time to work through these questions so that you can move forward with confidence.

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