8 Reasons Why Owners Should Sell Their Property Investments

[Chris Martin]

I saw this article on Yahoo! Finance by Debbie Carlson, U.S.News & World Report (May 2, 2019). There are times when selling (or exchanging via 1031) make sense. While I don't agree with some in my scenario, I can agree with other and have sold property in the past decade or so for reasons related to some of the items on the list, specifically (in my order): Long-term tenants leave, Loan terms may be ending, and Rental income is stagnant. That last item, Rental income is stagnant, is a motivator for my member's interest in selling lately. 

Had I written the article, I would add at least a few more: 

• - sell when the property is one of your poorer performing assets 
• - sell when a turnaround acquisition is not working to full potential
• - sell condos in >50% NOO complexes in a bull market to cash buyers (because non-conforming property that's leveraged can't be)
• - sell when you have a tax offset (ITC, accelerated depreciation, tax loss carry forward, etc.) 
• - sell when you have a 1031 exchange purchase contemplated (or close to set up) and you have a disposable asset that "fits"

Just curious if these conditions influence anyone else in BP Nation... please post if so. In general, I look for ways to achieve member's interest without selling, like re-leveraging or changing member capital/profit/loss (P/L/C on the K-1s) allocations, but sometimes sales make sense.  The consolidated list from the article (full citation: https://finance.yahoo.com/news/8-reasons-why-owners-sell-173513089.html)

Reasons to sell your investment property.

-- There are tax code advantages.

-- Loan terms may be ending.

-- Market conditions are strong.

-- Other real estate sectors look cheap.

-- Building has reached full depreciation.

-- Taxes may be increasing.

-- Rental income is stagnant.

-- Long-term tenants leave.