Why Sell you Investment RE now?
Jim Carmichael
THE Real Estate Guy, Entrepreneur, Podcaster, and International Speaker. GOOD ENOUGH IS UNACCEPTABLE
Say something like this:
All real estate is at the top of the market. So why would an investor sell now? I hear that all the time. Honestly, the answer is .... it depends. You are going to get more money for your asset right now than has ever been available before. The flip side is if you do a 1031 exchange into something else what are you going to buy? And why would you buy at the top of the market?
Let’s look at some of the reasons an investor would sell:
1. Top of Market means getting the most dollars, therefore equity, out of your property.
2. It’s a project the owner can’t or no longer wants to complete.
3. No longer geographically desirable
4. Property has issues the owner no longer wants to deal with.
5. Owner wants to get to a more liquid position to take advantage of the market when it turns.
For those of us that were around during the last recession, it took several months for the stock market to bottom out and even longer for the real estate market to bottom. As the stock market drops and lending tightens back up prices will fall quickly. And you will not be able to get ahead of it unless you are very lucky. I witnessed it firsthand last time around. Therefore, I recommend selling, putting the money somewhere liquid where it won’t be affected by the economy.
As far as doing a 1031 Exchange goes, this is one of those rare times where I can honestly say it might be better to pay the capital gains tax and hold on to your cash. This is a conversation to have with your CPA, figure out exactly what you will have to pay and how your overall tax strategy looks. Keep in mind you want to get to cash for what’s coming.
I’m not saying sell everything you have. Review your portfolio, talk to your CPA and talk to your real estate broker. Between you three you should be able to determine what to sell.
Of course, there s a chance myself and other prognosticators could be wrong, then what? Cash is always king. You will be able to purchase at some discount no matter what. Go back to #buyright.