Knowing When to Sell a Property

[Taylor Lacey]

Hey BP!

When looking to buy a new rental property, there are all kinds of metrics that many are familiar with to analyze any given deal.  What I have found to be a little more challenging to grasp is determining when the right time is to sell a property.  There are a number of factors to consider when deciding whether to continue renting a property vs. dumping it such as future home appreciation, rent appreciation, closing costs, and potential alternative returns with the proceeds of the sale of the home.  I am in the middle of making this type assessment on a duplex, and I ran across a calculator that computes your net wealth over a specified period of time for both scenarios.

http://www.allpropertymanagement.com/resources/rent-or-sell.html#

I feel that the calculator can provide a pretty good estimate of your net wealth in both scenarios, but one issue I noticed with the calculator is that the max “After Tax Re-Investment Rate” is only 20%.  What are your thoughts on this approach?  Do you see any shortcomings that I may be missing?

Taylor