With interest rates at record lows and rents at all-time highs, is this the time to sell?

A lot of potential sellers here in San Francisco have been asking me a chicken and egg question – namely, is now the right time to sell?

Of course, most agents would say sell! It’s a no-brainer, right? Well, it depends.

Balance considerations such as rent control, wear and tear, carrying costs, rental income versus debt service power, pervade against other factors such as a constant revenue stream that can service a good amount of debt, rental properties not only alter your tax filing – now you can file
a Schedule C and take certain deductions for upkeep and maintenance costs. But again income properties can also create more risk for your bottom line via increased insurance obligations, liability risks that come with tenants, ongoing maintenance and vacancy loss among others.

And, yet another way to look at it is from a present cash discount point of view.

Consider this, if you had $300,000 as a lump sum from a sale versus getting $300,000 at $5000 a month for the next six years, which would you do? Well, the two illustrations below examine that question of servicing a $300,000 refinanced mortgage versus investing that $300,000 at an 8% annualized rate of return.

So, what would you do?