Should you hold or sell your rental property?
The answer depends on a mix of personal goals, market conditions, and property performance. Here are the main things to weigh when deciding whether to keep or sell your rental property in today’s economy:
Reasons to Keep the Rental
Steady Cash Flow – If your rental is cash-flow positive (rents cover mortgage, taxes, insurance, and expenses), it may be safer to hold, especially with rental demand staying strong in many areas.
Inflation Hedge – Real estate generally keeps pace with inflation. Rents can often be raised over time, protecting your income stream.
Appreciation Potential – If your area still has strong fundamentals (jobs, infrastructure, population growth), your property may gain value in the long run.
Tax Benefits – Depreciation, mortgage interest deductions, and 1031 exchanges can reduce your taxable income.
Hard Asset Stability – In uncertain economies, many investors hold onto tangible assets like real estate instead of moving into volatile equities.
Reasons to Sell the Rental
High Equity / Low Return – If the property has appreciated a lot but rental income hasn’t kept up, you might be sitting on “lazy equity.” Selling could free up cash for higher-yield investments.
Rising Expenses – Higher insurance, maintenance, or local taxes could eat into cash flow.
Market Peak Concerns – If you believe your local market is overvalued and a correction is coming, locking in gains may feel safer.
Opportunity Cost – If you’d do better putting that equity into another property (or another investment), selling may make sense.
Personal Factors – If being a landlord has become a hassle—or you need liquidity for other goals (retirement, new home, business investment)—that’s a valid reason to sell.
Key Questions to Ask Yourself
Cash Flow: After all expenses, does the property give you positive monthly income?
Equity vs. Return: Could that equity be working harder elsewhere?
Local Market: Are rents strong and vacancy low in your area—or softening?
Future Plans: Do you want passive income for retirement, or do you need a lump sum now?
Taxes: Would selling trigger a big capital gains tax bill, or could you offset with a 1031 exchange?
A balanced approach some landlords take is to hold if the property still cash flows and the market fundamentals look good, but sell if equity is locked up and returns are shrinking—especially if they can reinvest smarter.
