How long should you keep your property before selling? The answer really depends on your particular set of circumstances. However, there are some general parameters that should factor into your decision making. For instance, timing is everything in real estate and commercial real estate is certainly no exception. Read on to learn what you need to know about how long to hold onto a property before selling.
How Long Property Owners should Hold Onto their Assets before Selling
When someone asks the question, “How long should a property owner hold on before selling?” The answer really depends on a number of factors. Of course, this supposes the owner wants to come out with a nice profit. But, just how does one ensure they receive a strong ROI?
It is crucial to memorialize every detail possible in the commercial real estate contract. Since courts usually only consider the four corners of a contract in order to settle disputes, all critical details of the deal should be covered in the contract. Too many individuals involved in commercial real estate use standard contracts that do not cover the unique contingencies that only exist in these types of transactions. —Harras Bloom & Archer LLP
It comes down to timing. For most property owners, that ranges from 5, to 7, to 10, up to 15, to 20 years. It just depends on the type of property, its location, its condition, and the local market dynamics. For instance, if you’re in a highly desirable location, the property is in good condition, and there’s buyer demand, you can sell it in a shorter amount of time than owners who have property in markets that are cold, with little buyer interest, even if the property itself is in great condition.
Things to Consider before Selling Your Property
Obviously, one of the biggest problems in determining when to sell a property is the fact that no one can predict the future. Although, there are certain signs to look for and steps to take to determine if it’s time to sell your property:
- Determine the property’s true market value. You’ll need to know what the property is worth before you proceed in any way. This is fairly easy with residential real estate but much more difficult with commercial buildings. Therefore, you’ll need to enlist the help and services of an experienced, local commercial real estate professional. When you know its true market value, that will tell you if it’s feasible (and profitable) to sell.
- Learn about the local real estate market. Next, you’ll need to get up to speed on the local real estate market. Even if you learn that the property’s value is high, this means little to nothing if the market isn’t responsive.
- Calculate your return-on-investment. It’s equally important to know how much you’ll come out with, once all elements are taken into consideration. Again, even if the property’s value is substantially higher than when you initially bought it, that doesn’t mean you’ll come out with a worthwhile amount.
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