When to get OUT of an Investment

Question: With a buy-and-hold investment strategy, are there indicators that you should keep an eye out for that mean you should offload a property? 

Great question!

The short answer is–you should get out of an investment when it is no longer performing like you want it to or no longer serving your goals. 

Everyone’s personal goals and investment performance standards are different, however, here are some common considerations for buy-and-hold investors.

Most buy-and-hold investors are investing for three main reasons: 

  1. Cash Flow
  2. Appreciation
  3. Tax Benefits

So, let’s look at these three things and develop some criteria to assess your investments quickly.


A lot of us love rental properties because of the monthly passive income they provide. However, sometimes certain properties can fall below acceptable levels of cash flow due to ongoing maintenance issues, eviction and tenant problems, and poor management. Here are a few things that I like to track in order to make sure my investments are performing as needed: 

  • Average monthly income
  • Average monthly profit
  • Average delinquency (how much rent is NOT being collected)
  • Average monthly expenses (management fees, taxes, insurance, maintenance, utilities, etc)
  • It is sometimes also helpful to specifically track your average monthly maintenance expenditures
  • Average vacancy 

It’s important to look at averages over time, because it’s very normal in this business to have “bad” months and periodic large maintenance expenses. The important thing is that, ON AVERAGE, your investment is performing to your standards. 

Set a standard for each of the above metrics, and if your investment starts consistently falling below your standards, it’s probably time to make a change.

However, before jumping to selling your property, consider whether there is anything else you can do to improve performance. Even if you do end up selling, improving performance will help you.

For example: 

  • Can you increase rents? 
  • Can you switch management companies and reduce your fees and maintenance expenses?
  • Can you do a “Cah for Keys” offer to get a bad tenant out?


By tracking your income, expenses, profit, delinquency, maintenance expenses, and vacancy consistently each month, you may be able to pinpoint where the real problem is occurring and decide whether you want to solve the problem or sell the property. 


A second main reason that many of us buy and hold property is for appreciation. Whether you are trying to increase your net worth over time or you plan on selling your property for a large profit over time, appreciation can be a great reason to invest in real estate. 

Similar to the cash flow metrics above, you will need to identify a standard to measure your investment over time in order to make sure that it is performing. A good and simple metric to use is the annual appreciation rate.

Here is an example of how to track this: 

  • Average Appreciation Standard: 5% (I want my assets to appreciate at 5% or more, on average, year over year)
  • Choose whatever standard works for your goals. 
  • Average Annual Appreciation:
  • (Change in value / Initial investment) 100 = appreciation percentage

Make sure that you are looking at the AVERAGE appreciation over time because it is very normal for market fluctuations to cause “good” and “bad” years. In general, it’s best to avoid making emotional investment decisions during a “bad” month or a “bad” year. Looking at the averages over time can help with this. 


Finally, a big benefit of buy-and-hold investing is the tax benefits. This is a more complex subject, and I teach a lot about this in my masterclass, but we will focus on just one important thing right now–depreciation. 

A HUGE benefit of owning property is that you can write off the depreciation of your property over time. This usually equates to thousands of dollars per year (at a minimum). 

Also, if you are looking at a higher tax bill year, you can do a cost segregation study of your property and write off a TON of depreciation. 

There are A LOT of tax benefits to owning real estate, but here is a list of 14 Common Rental Property Tax Deductions that you can take a look at to help maximize the tax benefits of your properties. 

Don’t underestimate what your property can do for your tax bill.

Overall, I this helps you decide how to evaluate and prune your investment portfolio over time. 


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