Should you hold a real estate property long-term?
For a savvy investor in residential or commercial real estate, it’s important to understand market cycles and the risks and returns associated with owning real property. Many investors who purchase single and multifamily residential properties believe that buying and holding the property is the key to success. It certainly can be for some, but for those with typical life changes, unexpected trans-formative life events and family transitions, a better way to wealth could be an annual reassessment of property inventory along with an examination of present returns and future values.
Many factors can drastically change the value of a property over the long-term: income tax restructuring, neighborhood decline, zoning changes, community development, economic change, and local government planning – to name a few. Assuming that a property will hold its value long term and continue to accelerate in rental income is probably not the best approach. An annual review with a real estate broker can target properties that may be in the danger zone and would be better sold and replaced with something else. Continue reading