If you are wondering when to sell your investment property, you are not alone. A lot of people bought rental properties over the last several years with one assumption baked in: prices would keep going up.

The idea was simple. Even if the rent did not fully cover the mortgage, taxes, insurance, and maintenance, the appreciation would make up for it. You were building equity. The property was paying for itself in the long run.

For a while, that worked.

But the market has changed. Prices have come down. Interest rates went up. And a lot of landlords are now looking at properties that are barely breaking even or losing money every month.

If that sounds familiar, you are not alone.

The Real Cost of Not Knowing When to Sell Your Investment Property

When a property is not cash flowing, you are essentially paying to keep it. That monthly shortfall has to come from somewhere, whether that is your savings, your income, or another line of credit.

But the cash flow gap is only part of the picture.

There are the ongoing costs that never stop. Property taxes. Insurance. Condo fees if it is a unit. And then there is the maintenance. Furnaces break. Roofs need replacing. Appliances die. A single major repair can wipe out a year or more of rental income. Even routine upkeep like landscaping, snow removal, and minor fixes adds up over time.

Then there is the equity sitting in that property. If you have $200,000 or $300,000 tied up in a home that is flat or declining in value, that money is not working for you. It is just sitting there, exposed to all the costs and risks of ownership.

Meanwhile, you are carrying all the risks that come with being a landlord. Tenants who stop paying. Repairs that come out of nowhere. Lengthy and expensive eviction processes if things go sideways. Damage that goes beyond the deposit.

And in this economy, those risks are higher than they have been in a while. Job losses are up. Tenant defaults are increasing. The legal process to remove a non-paying tenant in Ontario can take months.

The Appreciation Trap

A lot of investors are holding on because they are hoping prices will bounce back. They do not want to sell at a loss, or they want to at least get back to what they paid.

That is understandable. But it is worth asking: what if prices stay flat for another two or three years? What if they drop further?

Every month you hold a property that is not performing, you are making an active decision to keep your money there instead of somewhere else. That is fine if you believe the upside is worth it. But if you are just hoping things turn around without a clear reason why they would, that is a different situation.

Knowing when to sell your investment property often comes down to being honest about whether you are holding on for the right reasons.

When to Sell Your Investment Property

Selling is not the right move for everyone. But it might be worth considering if:

• You are covering a monthly shortfall out of pocket and it is stretching your finances.
• You have significant equity tied up in a property that is not appreciating.
• You are dealing with ongoing repairs and maintenance costs that keep eating into your returns.
• You are dealing with problem tenants or worried about the risks of being a landlord in the current environment.

You could use that equity for something with a better return or lower risk, whether that is paying down debt, investing elsewhere, or simply having more financial flexibility.

The goal is not to panic sell. The goal is to look at your situation honestly and figure out what actually makes sense for you right now.

You Can Always Come Back to Real Estate

Selling an investment property does not mean you are giving up on real estate forever. It just means this particular property, at this particular time, might not be the best use of your money.

Markets shift. Opportunities come back. If you sell now and want to buy again in a few years when conditions are different, you can do that.

The key is making decisions based on where things are, not where you wish they were. Understanding when to sell your investment property is part of that.

What to Do Next

If you are still unsure when to sell your investment property, it is worth taking some time to look at the numbers. What is the property actually worth today? What would you walk away with after selling costs? And what could you do with that money instead?

I help landlords and investors work through these questions all the time. If you want to talk through your situation, I am happy to help you figure out what makes sense.