Owning real estate is a solid long-term strategy for generating long-term wealth. At a certain point, your mortgage gets paid off and rental income becomes pure profit.
Since real estate is a long-term investment, property investors usually sell their rental properties under just two conditions: when they want to cut their losses, or when they’ve found a better investment and don’t desire the extra expense of managing both properties.
So why are Long Island property investors selling their properties? Let’s take a look.
1. The Long Island Housing Market is Hot
Like many other major U.S. metro regions, the Long Island housing market has been on fire. Home prices are skyrocketing and demand can’t keep pace. According to ABC7, the median selling price for homes on Long Island has risen by $73,000 in just the last year.
Normally, selling a home in Long Island is challenging and expensive. However, the market currently favors sellers.
Although standard listings are going fast, many homeowners are selling to companies like CoMax Properties that buy homes as-is, which eliminates the frustration of inspections, appraisals, and repairs. Long Island home buyers are engaged in fierce bidding wars, and many homeowners are accepting offers well above their asking price.
Properties are selling in as little as two weeks, and many people are buying homes without having visited the site beforehand. They have to act fast because there’s not enough inventory to keep up with demand.
Plus, there’s no guarantee other properties will become available. For property investors who need some cash or want to roll money into a better investment, it appears to be the perfect time to sell a Long Island property.
2. Some Renters Aren’t Paying Rent
Quite a few investors who own multiple rental properties have been adversely impacted by the eviction moratorium. Many haven’t been receiving rental income and have fallen behind on their mortgage payments and other bills.
Some of those investors have decided to sell properties and cut their losses before the hole gets deeper. Investors can only push forward for so long without rent from tenants.
The eviction moratorium has been in place for more than a year, so various investors are selling now rather than wait to see what happens.
3. People are Downsizing
For investors who live in one of their properties, downsizing has become a popular move. Many owners have chosen to move into a smaller home.
However, some people don’t wish to risk renting out a large, expensive residence in the current economy, so they’re selling large properties and downsizing to more affordable homes. Downsizing allows an investor to live in one of his or her properties while reducing expenses.
Another benefit to downsizing is the option to rent the home out later if one chooses to purchase another property. In an uncertain economy, investors have a better chance of finding reliable renters with stable income when the site is more affordable.
4. The Opportunity for Short-Term Profit is too Good to Pass Up
When the potential for short-term profit is high enough, some investors will sell a property or two to generate fast cash.
Not all investors are in the same boat financially. Some are struggling, while others are doing all right. For the ones who need some quick cash, selling for a short-term profit usually makes sense.
Another reason investors are willing to sell for short-term cash is to fund additional investments. When an opportunity arises to purchase a better, more profitable home, some investors choose to sell a less profitable property if they can’t afford to hold onto both.
Given the current situation with the economy and the unreliability of rental income, selling less profitable investments is often a smart move.
5. Investors Foresee the Market Crashing in the Near Future
The housing market isn’t necessarily in great shape. It may be only a matter of time before it collapses.
For individual property investors, that’s unsettling news. Most homeowners don’t have the extra cash to carry them through hard times; large corporations, on the other hand, may have access to hefty amounts of capital that can carry them through the tough stretches.
Small investors who see a crash coming know they can generate a good profit by selling to large companies like BlackRock. A real estate investment duo from New York recently liquidated the majority of their 96-unit portfolio in Rochester, New York, for example: They sold fifteen properties to a single out-of-state investment firm.
The duo had the majority of their investments in affordable housing, which isn’t a good market to be in right now. They sensed a tidal wave approaching and decided to liquidate before it might be too late.
6. Property Investors are Using the Money to Start a Business
Some property investors are moving away from real estate completely and trying to start a business of their own. Though the real estate industry hasn’t crashed yet, it’s volatile and a little bit shaky. Single investors who work for themselves can rightly regard that as a potentially big risk.
Thus, some investors are selling their Long Island properties to fund operations in other industries. For instance, certain people have shifted into marketing, launched a drop shipping business, or started a tech company.
Do you have a Property to Sell in Long Island, NY?
Sometimes selling your property is the best move. But only you can know what’s right for your situation.
We hope this article will help you gather some insight into whether or not you should sell. If you own rental properties, you’ll need to consider the potential for lost profits and weigh that against your current losses due to the eviction moratorium, if you’re incurring any.
Although you can sell your properties at any time, it’s better to do it when the demand is high and people are willing to pay a premium. If you have a property in Long Island you’d like to sell, now’s the time.
The market certainly won’t stay this hot forever. Sell your home now while you can still enjoy a tidy return.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.