As a multifamily real estate investor, you probably get calls from brokers all the time telling you now is the perfect time to sell. The reality is that there is no perfect time. Because there are numerous parameters, the decision to sell is beyond anyone’s knowledge but yours. After analyzing clients’ decisions over the years, four key buckets stand out in determining if it is time to sell: macroeconomic trends, microeconomic trends, asset-specific factors and personal factors.
Ask yourself the following questions to determine the status of your property. Whenever you feel you are in two or more of these buckets, it is more than likely a good time to sell. If you find yourself in all four buckets, sell the property.
Bucket 1: Macroeconomic Trends
Alternative use of capital (stock market, etc.), interest rate changes, job growth, GDP, fair housing changes — all these are examples of macroeconomic trends that could impact your desire to keep your multifamily investment. The easiest example of a macroeconomic decision tree is interest rates. Have you factored rising interest rates into your investment hold? If you have a term loan, when is it due and what impact will interest rates have on your refinance? What does your return on capital look like on a refinance versus obtaining acquisition financing for an alternate property — and does it make sense to move the equity from your current investment into a new one…