A just-released survey from the National Association of Realtors (NAR)* confirms what we have been hearing from a growing number of our clients: a record number of residential property owners now believe this is the right time to be selling. Nationwide, the survey reported that 77% of homeowners either strongly or moderately think that now is a good time to sell their properties. Owners of properties in Western states where property appreciation has outpaced other regions reported 85% favorable views towards believing that this is a good time to sell.
"Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end," stated NAR Chief Economist Lawrence Yun.
Rental Property Owners are Selling
Many rental property owners in highly appreciated areas have not seen their rental income rise as fast as their appreciation and are becoming more motivated to sell at today's historically high prices and reinvest in areas where they can derive higher income. For example, in the greater San Francisco Bay area, many of our clients are reporting that net cash flow on their appreciated rental properties is less than 2% of total equity after all expenses. As an example, a recent analysis that we completed for a client revealed net annual cash flow of only $10,000 on a rental property currently valued at about $1,000,000 - or a net return of only 1%.
Through selling a rental property and reinvesting their appreciated equity in areas with more attractive cap rates, many rental property owners can potentially obtain 2X to 4X greater income. Furthermore, if they choose to invest in rental properties structured as a Delaware Statutory Trust (DST), they can further benefit by having the trustee/management firm take on management and loan responsibilities thereby relieving them of much of the hassle and liability of being a landlord - while retaining the tax benefits of real estate investments. Selling appreciated rental properties and then reinvesting in higher yielding DSTs is becoming a preferable route for a growing number of rental property owners.
Older rental property owners who have realized favorable appreciation on their properties are the largest group who are exploring options to sell and reinvest for higher income.
If you are growing tired of managing tenants, maintaining your property, or dealing with growing rent control, and you want to enjoy greater income - then you are not alone. These are common frustrations that we hear from our clients regularly.
Those rental property owners who have children are also motivated to reinvest in properties that require less management and day-to-day responsibilities since their kids often have less interest in performing the added work that may accompany typical rental property investments.
We Can Help You Convert Appreciated Equity into Potentially HIgher Income
If you have appreciated rental properties and desire to generate greater income or transfer your appreciated properties to heirs, please contact our team members at First Guardian Group to explore your options. We are pleased to provide you with a no-cost analysis of your real estate assets and offer recommendations and options that may help you and your family better achieve your objectives. We can provide a "one-stop-shop" for assistance with 1031 Exchanges, a sale of rental properties, reinvestment of sales proceeds into potentially higher income producing properties - plus provide referrals to knowledgeable real estate tax advisors and legal and estate planning specialists.
Our firm has broad access to income property options throughout the US and can help you identify sub-markets and asset types nationwide that may better meet your needs. We can help you source properties in all common asset classes including multifamily, retail, medical, commercial - and even single-family rentals. We can also provide current market reports and obtain inputs from local market specialists through our nationwide network of real estate advisors.
Please call us at 866 398-1031 or send us an email at info@FirstGuardianGroup.com for more information or to schedule a no-obligation consultation.
* https://www.nar.realtor/sites/default/files/documents/2018-q3-home-survey-09-26-2018.pdf
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