Whether you should sell or keep a rental property is a matter of timing, but not timing alone.

Maybe you’re looking to pay off debt, your tenants’ lease is about to run out, or you’re just feeling ready for a change.

Whatever the reason, it's not easy to decide if it's the right time to sell your rental property.

The market is full of ups and downs and it can be near impossible to foresee when the next boom will be. Nobody wants to sell their rental, only to find out they missed a 7% growth rate for the year, like the regional market in Australia, is seeing now.

To help you decide whether it’s time to sell or keep your investment property, we’ve got some advice for you.

The average time an investor will hold onto their property is 7-10 years, but don't treat this as a rule set in stone.

Here are 6 indicators that now is a good time to sell your investment property:

1. You're holding a rental in a stagnant or declining market
2. You've recently retired or started working part-time
3. The property is negatively geared but isn't growing in value
4. There are other investment opportunities out there you'd rather stick your feet in
5. You spend more than you make on your investment property
6. If your investment property is a dud

Let's dig into each of these cues.

If the area that you’ve invested in is at a long-term property market standstill, you may want to sell before it starts to decline further.

A way you can know if this is the case is if the area is seeing higher vacancy rates, if the population in the area or suburb is stagnant, and in general how sentiment is at the moment.

We recommend looking at SQM Property Indexes and CoreLogic Housing Updates to keep track of these metrics. Also, talk to your local real estate agent for information on market conditions.

There's a time to sow and there's a time to reap. Upon retiring or seeing a reduction in your workload, it's likely a time to collect the benefits of the property you've been holding.

This goes doubly if your rental is a negatively geared property. The expenses may be hard to keep up with, and you'll be better off selling.

Of course, this will depend a bit on your financial goals. If it's a positively geared rental and you're happy to live off the rental income, that's fine. But you should have a plan as to when it's time to sell the property and live a little.

Plus, this change in circumstance may be a great opportunity for you to sell. As you have less or no taxable income, you won’t be required to pay as much Capital Gains Tax (CGT).

CGT is basically the government’s fee on the profit (or capital gains) you’ve made from your investment property, so by selling while you're not working full-time, you get to keep more of what you've made.

No matter how much research you do before investing in property, sometimes rental properties just won’t perform as well as expected. If you’re losing money and the property is depreciating in value, it’s definitely time to consider selling, particularly if the market is looking stable.

The whole reason we’re in the property investment game is to increase capital gains, and if you’ve found an opportunity to do just that, it's better to seize it.

Just do your research first. Remember that there are a lot of costs associated with both buying and selling a property, so make sure that the flip is going to be worth it in the long-run.

The ATO also has great advice on tax deductions when selling a rental property.

Owning an investment property is about making a return on your investment, but the chances are that you are spending more on this property than you are making from it. The price of owning a property aside, rental homes cost significant maintenance, compliance and from time to time leasing costs (if you employ a great property manager).

Although. there is a caveat, if you have just invested in this property it might be too soon to see any returns, but if it has been more than 5 years since you've seen a return on investment, it's probably time to sell your investment property.

Investing in property is easier said than done, with several factors to consider it is impossible you might miss a step and place your bets on the wrong proverbial horse. A dud investment property will often leave your tenants unsatisfied and leave you with empty pockets from constant maintenance issues that will need fixing. If you find yourself in this situation, selling your investment property is probably the best option for you.

Knowing when to hold is an artform on its own, and it's an important one.

Not selling your investment property can mean greater benefits in the long term. So, here's a few ways you can tell that you should keep your head cool and stick to your guns.

If you’ve only had your investment for five years or less, it may cost you more to sell than it’s worth. As you know, the costs of buying a property are extensive, and the same can be said for selling.

Taking into consideration your real estate agent’s commission, home updates, closing costs, and advertising (we could go on), selling can be a pricey venture. To ensure you’re not coming out at a loss, we’d recommend holding onto your property until you can be sure to make some capital gains.

ANZ has a comprehensive list and price breakdown for selling a property worth checking out.

This should be an obvious one, but sometimes a lull in the market can scare investors into thinking they need to sell. If your property is located in a growing area, you’re finding it easy to get tenants, and its value has increased since you purchased, there’s no need to consider selling.

Sure, maybe it could be better, but we'd rather you keep your risk on a minimum and take the safe route for more financial stability.

It’s also more difficult to maneuver selling a rental property with tenants, so if you’ve got quality tenants at the moment, we’d recommend holding onto them. Remember, it’s not just about short-term gains - your property is going to steadily increase in value over the long term

We mentioned earlier that if you find a better investment opportunity, you should grab it.

That being said, you need to avoid just looking for novelty. Too often do we see property investors let go of a perfectly good property because they wanted something new and exciting.

On the contrary, it's a pretty good sign if your rental is boring you out. It just means that things are going good, stable and without trouble. So, don't shake it up just for the sake of it.

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