When is it time to sell a rental property?

Question

I have rental unit (condo) that I've owned for about 15 years. It has been constantly rented since I purchased it. I have no mortgage on the property and it generates about a $6k surplus each year.

When my current tenant moves out, I'll have to re-carpet and re-paint, maybe renovate kitchen.

My question is, since all the appliances are original (and still in good working order), when this tenant moves out and I do my renovations (mentioned above) should I sell it before some of the expensive things start breaking down (a new heat pump will run me about $6,000) or re-rent it?

Thank you!

Chinmay J. · Answer

It all depends on your financial goals and how you want your portfolio looking 5-6 yrs from now.  If you own rental properties, at some point the things are going to break.   Also, don't think that people buying the property won't ask you for a price adjustment given that the high ticket items are so old.  So either way, you are going to lose money - 6 of one half a dozen of the other is how I look at it..

With the limited info that you provided, I personally would keep it in my portfolio as long as the unit is cash flow positive and the outlook for the location and overall rental market is positive.  But again, the best decision could only be made by you based on your financial goals for next 5-6 yrs - the big picture..