Never sell because it’s gone up. - Posted by GL(ON)
Posted by GL(ON) on March 03, 2002 at 08:52:41:
The way you make the real money in real estate is by buying and holding. Your experience proves this. You could own that property for 50 years and it would keep going up.
The only reason to think it’s going to go down would be if you are at the peak of a boom. When a boom is on people get quite irrational, they will rush to buy even though the price makes no sense at all.
Check out other rentals and make sure your rents are in line with the market. Figure out what the break even price would be. In other words at what price would the building’s rent pay the expenses, and mortgage payments? If the market price is way over this, and well into negative cash flow territory, then maybe it is a boom and you should consider selling before prices drop. Even so, prices can continue to climb for 2 or 3 years after they get into negative cash flow territory. In California they have been there for 40 years, in places.
So don’t sell just because it’s gone up. That is normal and nothing to worry about. If you are considering cashing out anyway, the peak of a boom is definitely the time to do it. But if you are not in a hurry you could also wait until the next boom.