The real estate market is unpredictable. One moment the market is good for selling, but that moment can be fleeting and prices can drop quickly, making it a good time to buy. Even experienced investors can get caught off-guard. So how do you know when to sell and when to hold?
According to some research, the commercial real estate is expected to continue to grow over the coming years, but a slowdown is expected. This means that it may be wise to hold onto properties you’ve already purchased until the market turns up again.
“The commercial real estate market can change quickly. But deciding when to sell involves conducting as much rigorous analysis as when deciding to buy. But, in addition, part of deciding when to sell must also include understanding what the reinvestment opportunities are and the potential tax consequences of holding vs. selling,” says Howard Rudzki, CEO of [x].
The return on real estate investments vary based on such factors as fluctuations in the market, costs to maintain the property (such as taxes, maintenance, and insurance), the amount of income received, the interest rates, and the type of property. But as a general rule, buying and holding properties is a great strategy. This is especially for new investors, because it poses fewer risks than other types of investing and offers many benefits.
“Over the long term, a substantial real estate property will grow in value,” Rudzki adds. “You just have to make sure you wait long enough for this to be true. It’s not always easy to decide precisely when to sell, but you can almost guarantee a return on your investment when you hold the property long enough.”
Utilizing a buy and hold real estate investing strategy poses fewer risks than other types of investing and offers many benefits including rental income, tax advantages, appreciation and equity building. However, to take advantage of buy and hold real estate investing, you must make sure that you purchase a quality property and that you manage it well.
Anyone looking to invest in real estate would be wise to first seek an experienced professional to help with their investing decisions and property management needs. With the right team in place, a new investor may find that commercial real estate offers several investing opportunities.