The question all good investors must ask is, “When is the right time to sell my rental properties?” All markets, including commercial real estate, go through cycles. Riding a market when it’s on a strong upswing is truly a euphoric feeling.
Where are we on the Real Estate Market Cycle?
But where will the real estate market go from here? Shown below is a chart that shows the four phases of the real estate market cycle. I believe in 2016 the Pacific Northwest commercial real estate market moved from Phase II – Expansion to the beginning of Phase III – Hypersupply. Why? Because we are seeing for the very first time vacancy rates beginning to rise. Secondly, it’s all about rent growth. It’s still positive but rent increases are substantially less than they were a year ago. This puts us firmly in Phase III where rent growth is still positive but declining.
4 Questions Before You Decide
So is it time to divest of your real estate? Before making that decision, here are four questions to ask yourself: (more…)