Should I Sell or Keep my Rental Property? – Ask Coach

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About This Episode

Episode #330 – Coach and Erion share insights on recognizing opportune moments to sell, such as peak property value or declining quality, and discover poor reasons that may lead to suboptimal outcomes. Whether navigating market fluctuations, evaluating replacement opportunities, we’ll equip you with a strategic approach to maximize the potential of your real estate investments.

Episode Transcript

What if you already own a rental property, but you’re not that excited about it anymore? Maybe you had a big repair recently that ate up all your cash flow. Maybe you had a bad tenant, or maybe you’re just nervous about the current market. The question is, should you sell this rental property or should you keep it? How do you decide which one you should do? That’s the question we’re going to tackle in today’s episode of Ask Coach, and we’re getting started right now. Welcome to the Ask Coach edition of the Real Estate Investing podcast. I’m your host, Chad Carson. You can also call me Coach Carson, and this is a show to help you get out of the financial grind so you can spend your time doing more of what matters. Today’s question was inspired by a one-on-one coaching conversation I had with Jonathan Mogoyon inside my community, Rental Property Mastery. If you haven’t heard of Rental Property Mastery, it’s a private community where I do coaching, where I’m helping people like Jonathan and 110 other people currently to find properties, to raise money, to get the financing and the down payments they need for their properties, to learn how to manage them and systematize them so that eventually they have a passive rental property business that pays them money so they can have financial freedom.

If you’re interested in that and you want help in coaching and accountability in small mastermind groups, check out Rental Property Mastery. There’ll be a link in the podcast and YouTube description below. To help me answer this question, I had a conversation with my friend and one of the smartest real estate investors I know, Erion Sheehae from Houston, Texas. He’s also known as the Investing Architect. Now, let’s get to our This is a question that every person who owns a rental ask themselves, I have this rental property, should I sell it? If I should, when is the right time to sell it? This is a complex question. It has a lot you could go into, but I have today my friend, the expert that I always go to, if I want to talk about real estate investing and bounce ideas around, Erion Sheeha. Welcome. Good to have you here for this Ask Coach episode.

Yeah, good to be here.

I want to frame this question. If I came to you, I already owned I find a few rental properties and I’m debating to myself, Should I sell this rental property? Should I just do something else? Should I buy something else? How do you think about this question, Should I sell my rental? What goes into your mind if I asked you that?

Before we go into how to actually decide, I think there are three good reasons and three bad reasons to sell a rental property or an investment property. First, let’s go over the good ones. The first The good reason why you should consider selling is because the value of your rental has hit a max, and that has resulted in you having a much lower return on equity. What I mean by that is, let’s say that you purchase an investment property and you purchase it at market value for the sake of this discussion. You go in and you put 20% down, you finance the rest. Initially, your equity is equal to your down payment. Now, if the property does well over time, so you hold it 5, 6, 7 years, and it’s gone up in value, now the mortgage keeps going down, so the equity keeps growing. Even if the property is performing the same as it was when you first bought it, because the equity has skyrocketed in the property, your return on equity is low, which means that it may force you to consider like, Hey, is my money working as hard as it can in this shell of a property?

Or would it be better to free it from that property by selling and then putting it back to work so they can earn at the same level that it was when you made the decision to purchase this one? That’s That’s a great reason to consider selling a property. Just because you’ve got equity doesn’t mean that you should always sell. But that is one trigger where when I think about selling, I always want to sell on my terms. I don’t want to sell forced by something. It’s never favorable to the investor when something else triggers them to sell. But if I can sell on my terms and figure out what are the things that serve my interests, where a sale could be beneficial, then I’ll look at those reasons.

It’s basically saying the big picture here, you’re the investing architect, so you’re building a plan for somebody. Our goal is to eventually have financial freedom and use our equity to help us get the job or whatever we want to do. A potentially good reason to sell is you’ve got enough equity and it’s not optimized anymore. It’s not performing as well. You have these little soldiers, this army of money, equity out there working for you, and they’re not working as hard as they could. Maybe I could put into another vehicle, go somewhere else. That’s at least the beginning. We’re going to talk about maybe some reasons you shouldn’t, but that’s a good… It’s an opportunistic reason. It’s not a reactive reason to sell a property.

Correct. That’s the first reason. It’s a first good one. The second one is that there’s been a deterioration of the quality of the location, the property, or the tenant pool that that location tends to attract. When you make a purchase decision, you have a thesis. You might not write it down. Some of us write it down. Some just have a feeling or they go by gut feeling. But essentially, the thing that makes somebody invest in a property is a thesis Hey, I’m buying this property because the location fits my criteria. It’s going to attract this type of tenant. A property is really good quality of construction, so it’s going to be relatively headache-free over a period of time. That’s the narrative in the investor’s mind as they’re making a purchase decision. Now, the beauty of actually being an investor and pulling the trigger and purchasing is that later on a few years, you can You can test those assumptions. The reality is going to show you, well, is the location really good? Does it attract the type of tenants that you want? Sometimes an area starts heading the wrong direction. That would be a good reason.

This is more of a defensive reason. The first reason that I gave you was more of an opportunity, more of an attacking play. This one is more like, Hey, you see a risk in the horizon. Does it make sense to take that capital out and put it in a property that does fit the thesis that you had initially?

Which is another good reason to do two things. One, pay attention, have your ear to the ground in your local market. If you’re out of town, having a local property manager conversation all the time, your local agent conversation, Hey, what’s going on? How’s this neighborhood doing? Because that stuff’s fluid. It doesn’t move overnight. It doesn’t move rapidly. Correct. But you can get ahead of it. You can see things going better or getting worse.

The key is not to fool yourself. Because you can convince yourself of doing anything. But just be objective and don’t try to revise history and change your criteria and move the goalpost halfway in. Just Stick to your criteria and evaluate them correctly as to, do they still fit the box?

Yeah, love it. All right, good. Reason number 2, location deteriorates. Your original thesis isn’t It’s not accurate anymore.

Correct. The third reason is that there is some exceptional replacement opportunities, meaning you can have a property that’s doing well, but opportunities that are out there are so enticing and so they can help you power faster to your goal. An example of this would be, let’s say you have a single family property and it’s done really well for you. It’s a solid performer. It’s doing so well. It’s got good equity. Even the return on equity is good. You’d want to keep it otherwise. But there’s this opportunity where you could take that capital from one unit and You’re going to purchase four units, right? And it’s a great return. It’s a great opportunity. And that would be another reason why you should consider selling your properties.

You could sell that one. If you had 150,000 equity in that property and you’re buying this property for 400 grand, 500 grand, and you could take that equity, move it to here, and you’re going to make… You like the location just as well or better, and the return looks just as good or better. And so you’re like, All right, this is a good reason to sell.

I mean, you like the location better. You get to start the depreciation clock over again. You might buy something that’s newer versus something that’s 20 years old. So you can reset the clock on a lot of things and scale. So that would be a third good reason to sell their properties.

All right, we’ve got a checklist of good reasons, so I’m anticipating the bad reasons. Why should I not sell my property?

Well, the first one is an impulsive reaction to market fluctuations. It’s not a matter of if, it’s a question of when there’s going to be market fluctuation. If you are expecting your property to always perform and there not be any changes in the marketplace, you should probably not invest in it at all. You should just buy bonds or whatever where the coupon is fixed and you know. But what you don’t want to do is you don’t want to… It’s almost never a good idea for an investor to sell property under pressure. That’s a cardinal rule. What you want to do is you want to make sure that you put yourself and you set up your structure in in such a way that you have the funds, the emergency funds, to ride out any these storms that could happen. That’s the part where sometimes I get an investor and they say, Well, I’ve got $100,000 to invest. I said, Okay, but is that in addition to your emergency fund? She’s like, Oh, no, that’s all of it. I said, Well, you don’t have $100, then. Because what ends up happening is you pull the trigger, you make your purchase, and then something changes in the market.

The rents go down, vacancy goes what have you, and you just can’t ride that storm. Now you’re in the market trying to sell at the exact worst time that you could possibly sell.

I’ve got a student, a friend who has some properties in a really good market in Texas, actually, nearby in Austin. Excellent long-term fundamentals. You probably know more about Austin than I do, but right now, the last six months have been difficult renting the properties. There’s been a lot more vacancies. There’s a lot more supply on the market. I tell them it’s almost like you throw a big rock in the pond of the market of Austin, and all of a sudden, the supply just waves everywhere and it hasn’t settled back down. That, to me, seems like a bad time to try to sell a property. It seems reactive to what we’re talking about here, impulsive. Oh, man, I’m getting a lot of vacancies. This It’s harder to rent. I’m having to lower my rent some. Not the right time to sell.

No, not at all. I would argue it’s a good time to buy.

Yes, I agree.

From the people that are rattled by those fluctuations.

Exactly. There’s always another person on the other side of that. Of course. The rule we’re saying, Don’t sell just because you’re impulsive and things seem hard right now. But be a buyer. When there’s blood in the street and everybody else is panicking, you need to be a buyer.


We have one bad reason, being impulsive, the markets changed. What else do you got there?

The second bad reason would be to cave in the peer and blindly follow trends, where you go in and you sell because of anecdotal evidence from people in your ear, that could be your friends, that could be your family. Oh, somebody I know bought this property in an indiscreet location. It’s just these very abstract situations or reading articles and saying, Oh, this year, the hottest market is in North Dakota. You’re following Having those trends without taking into consideration what your original plan is, what your path is, what your journey is. Just making a decision to sell for those reasons is never a good idea.

I’ll add another one in there. A bad reason to sell for me that I’ve had a lot of people bump into is that you have this really high-quality property, and it’s one of your best locations. You like the property, but somebody has made you an offer and really wants to buy that property, and they’re hot on their… I love to buy your property, and it’s often your tenant who wants to buy the property or some of the investor. I found some of my best properties, my best locations, and what I want to keep forever will get the most offers and the most interest and those people sending letters. Of course, they should, right? Yeah, they should. That’s never a good reason to sell a property. In fact, that’s a good indication you should probably keep it if you’re getting everybody wanting to buy it. The properties that nobody wants, the ones that are… I used to have some of these properties that I bought in 2007 and ’08. I called them the bubble gum on the bottom of my shoe. They were just stuck to my shoe, and I couldn’t get rid of them. I wanted to sell them.

I wanted to get rid of them, but the guy may have stuck on my shoe in 2007 and ’08, and I had to keep the thing. Whereas the best properties you have, they’re easy to get rid of. You could sell them tomorrow. So another, maybe I’m throwing in there a bad reason, number three, is just because somebody made you an offer or your tenant wants to buy the property, not a good reason.

Well, my third reason is related to that, which is that selling for the thrill of making moves is a bad reason. And this is what I mean by this is when you go out there and you’re buying your investment properties, that’s exciting. There’s a lot of research that goes into it. There’s a sense of accomplishment that comes from closing a deal. You feel like somebody’s out there doing things, making moves. And then when you get a good property, what follows is a little bit boring. Things don’t… I mean, Yes, you’re making cash flow, but it’s not the same. You don’t get the same dopamine rush that you get by closing your deals. So sometimes people just sell just to create movement in their life and excitement. It’s really important for investors to understand that it’s not the job of your investment properties to excite you and entertain you. You should find that somewhere else.

Yeah, go jump out of an airplane with a parachute or do a bungey jump or go on a roller coaster, whatever you want to do. But don’t try to get that excitement, that rush from your investments.


Well said. I love it. You might have some more you want to add to this, but let’s summarize this. Somebody has an existing rental property. We’ve given them a checklist. There’s three good reasons here. If you have one of those good reasons, or there might be some other ones, too, then maybe you consider it. Then you calmly, you patiently consider selling, not in a rush. If If you’re emotional, if you got some impulsive push, you want to be excited and you want to do something different, maybe consider those bad reasons. Because ultimately, I always compared Arion to a chess match. You’re playing chess with real estate. If you can calmly think about the move, which selling a property is a big move. You did a lot of work to buy it, to finance it, to hold on to it. You always want to be careful with that move. You want to be thoughtful with that move. If it’s a good time to do it, do it and make a decision. To get a realtor to help you and do what you got to do. But you got any other final thoughts on this, on how somebody can actually make that decision?

In the context of the good and the bad moves or the good or bad reasons, the way that I would The other side is I would go through the good reasons one by one. The first step would be, figure out what is your current equity and what’s your return on equity. A lot of investors have never done this exercise. They say, Oh, I invested 50,000 when I purchased it, I make this much money, so my return is this. But they don’t know that the equity portion of it is also part of their investment. Going through that exercise and calculating their equity and calculating their current return on equity, that’s a sober It’s a winning moment. They should do that first to figure out, Hey, how hard exactly is my money working inside this property? That would be the first. The second is, reassess the quality of the location of the tenants and of the property. In other words, would you buy an identical property to the one that you own next door to it, knowing what you know today? If the answer is no, that could be a reason to consider an exit. Third, you should evaluate what are the opportunities in the market.

A smart investor never just sells to sell. It’s always sell so that you could make your next just move. It’s never about just cash out because you cash out and then what? Money just sitting in the bank is not working for you, so you need to figure out, okay, once I… You have to think two moves ahead. It’s always, I’m going to make this. If I make the sale, Then where does the money go? Finally, the fourth step is you always have to consider everything in the context of your overall plan. Meaning, if I do sell this and I purchase this other opportunity, does that advance my interest in terms of the journey, does that move me faster to financial freedom or financial independence, or does it take you backwards? Because you could have a situation where you could have the good reasons to sell, you could have a good opportunity a good opportunity to buy, but if they don’t move you forward in your journey, then it’s probably not a good time to sell either.

Well said. I’ll just add, as you go through those four steps, it’s been super helpful for me to have people in my life who are not inside in my head to run this by. Sometimes my wife is a business partner for me. Having a friend like Arion to call who’s another person in the similar sphere to you, if you have a mentor, if you have a coach, if you got a real estate agent, a property manager, just running these decisions by somebody else who’s not you can get some of that emotional filter out. If you have to explain it to them and tell them why you’re thinking about doing this before you actually do it, it brings things back to the basics. You have to show those reasons why. If it’s just like, I just hate this property. I don’t want to own it anymore. Okay, calm down a little bit. Let’s talk you off the ledge a little bit so you actually have to think it through.

Sometimes just vocalizing it just makes it better and leads to better decisions overall.

Yeah. Well, I love this framework, Arian, and I think this will be helpful for people. If you’re watching this on YouTube, leave us a comment below. Let us know what your criteria are for selling a rental property or how you’ve decided to do that. If you have any questions for us, let us know. If you want to send us an email on if you’re listening to the podcast, send it to podcast@coachcarson. Com. Arian, if people want to follow you and hang out with you, where can they find you and connect with you online?

They can find me on X or Twitter @InvestArchitect, my website, signaturehouston. Com, and on LinkedIn.

Great. I’ll put links to all those in the podcast description and the YouTube description. Thanks so much for being here with me.

Thank you.

If you like the topic of this video, I think you’ll like my next video where I show you how much tax I paid on a rental property when I sold it. If you’re considering selling a rental property, you might be shocked how much you might have to pay in income taxes. Check this video out. I share all the details of my own property. Then I give you a spreadsheet for free where you can use that to calculate on your own property how much you might pay in taxes. There’ll be a link to this video in the YouTube description below, or if you’re listening on the podcast, it’ll be in the podcast description. I’ll see you in the next video.


  1. Next Video: How Much Tax I Paid When I Sold a Rental Property
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