When should I decide it is time to sell my rental?
Dustin Edwards • July 3, 2020
At Some Point the Decision to List for Sale or Continue for Rent Should be Asked
Owning a rental property is usually filled with a bit of trepidation. After all, what happens the first time the property is vacant? Of course for many that decision doesn’t even alarm them, but there always comes a time when people ask...should I sell my rental?
While we aren’t CPAs, you can look up the tax code and find out that you can sell a primary residence with a gain of up to $250,000 as an individual tax free or up to $500,000 if you are married. tax free. This rule applies if you have made the property your primary residence for at least 2 of the last 5 years. In Southern California where the gains can be in the 5-10% range annually over a 5 year where the median home value in Los Angeles County was valued at $650,000 in 2020, then taking a tax free gain can be pretty tempting. If it were only that easy then many people might sell each time within the 5 year window, so why do so many decide to keep their rentals? We invite you to consider a deeper thought process to help you decide what is right for your goals.
Selling Outright
When we work with property owners, sometimes it is their first rental and that is great. At times that means they use that first rental as the foundation of a real estate portfolio and at other times they decide that owning a rental just isn’t for them. Regardless of their decision we are here to help them in their mission
If selling is the right decision, we do have a division that is designed to help our rental owners sell their investment properties. Especially those owners who meet the requirement of having occupied the property 2 of the last 5 years as their primary residence we understand the objective of taking those tax free gains vs. taking the long term gains that are offset by depreciation.
For those owners taking the gains on their investment property the main question we ask is “what is your goal with the gains from this property?” While certainly people don’t have to answer, our main purpose in asking the question is ensuring there is a plan in place after the sale. With any of our clients we want to make sure we help them achieve their goals, even if that means we don’t benefit long-term.
1031 Exchange
For many long term property owners this has proven to be a great strategy. A 1031 exchange
allows you to defer the taxable gain. In other words you could have a gain, north of $500,000 (if you were married) and delay the taxable gain. For many property owners, especially those in Southern California, it can allow you from being a single family rental owner to a 2-4 unit property owner.
For example, just envision that you are the owner of a $700,000 single family home owner in Long Beach and you have a dent position of $150,000. Your gain, even with fees, would likely be north of $500,000. Provided that you are looking to put a minimum down on your next income property that would allow you to invest in a property north of $1,500,000 giving you access to a wide array of real estate options (2-4 units or even larger) throughout Long Beach.
End of Depreciation Period
The decision to sell might also come due to the end of the depreciation cycle of your residential income property. The tax code(please check with your CPA) allows a depreciation expense for 27.5 years. If you have owned a residential income property, especially in Southern California, for 27.5 years it is likely that you have a large gain available and it could just be time to sell. Of course if you are in that position we would recommend meeting with a CPA and even including us to explore your options in up leg properties to see if a 1031 exchange might be best.
Whether you want to take a tax free gain, are considering a 1031 exchange or you are at a crossroads due to the end of depreciation we understand the decision isn’t an easy one. When you want to find out more about your options invite you to call us today (562) 888-0247 and we can share our experience. When you are confident you want to continue to rent out your property we invite you to fill out our Free Rental Analysis
where we perform a comprehensive comparison to share your rental stacks up to the competition.
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How Long Beach property management companies market rental properties: pricing, professional listings, multi-platform exposure, fast responses, and screening.
One of the most important steps in successful rental property management is tenant screening. While marketing attracts applicants and leasing fills vacancies, the screening process determines whether a tenant will be reliable, respectful of the property, and consistent with rent payments. For Long Beach property owners, proper tenant screening can mean the difference between stable rental income and ongoing management problems. Professional property management companies in Long Beach use structured screening procedures to evaluate applicants carefully while remaining compliant with fair housing regulations. A strong screening process protects your property, your income, and your long-term investment. Why Tenant Screening Matters Tenant screening is designed to reduce risk before a lease is signed by evaluating applicant reliability. When landlords skip or rush this process, they increase the likelihood of avoidable issues. These may include late or missed rent payments , lease violations, or property damage. Additional risks include neighbor complaints and costly eviction proceedings. Replacing a problematic tenant can be expensive and time-consuming. Between lost rent, repairs, and vacancy periods , a single bad tenant placement can cost thousands of dollars. Professional rental property management prioritizes careful screening because prevention is far easier than resolving problems later. The Tenant Application Process The screening process begins with a rental application. A thorough application collects information needed to evaluate whether an applicant meets the property's rental criteria . Applications typically request: Personal identification information Employment and income details Rental history References from previous landlords Authorization for credit and background checks Property managers review this information to ensure the applicant meets established qualification standards. Consistency is critical; property management companies in Long Beach must evaluate applicants using the same criteria to remain compliant with fair housing laws. Credit History Evaluation Credit history is one of the most common factors considered during tenant screening because it reflects financial reliability. A credit report provides insight into an applicant's behavior over time. This includes payment history, outstanding debts, and collections accounts. It also shows credit utilization, which helps assess overall risk. While a credit score alone does not determine whether someone will be a good tenant, it helps identify patterns of financial responsibility. Professional Long Beach property management services evaluate credit reports carefully while also considering income stability and rental history. Some applicants with lower credit scores may still qualify if they demonstrate strong income and a reliable rental record. Income Verification and Affordability One of the most important indicators of whether a tenant can consistently pay rent is income stability. Property managers verify income to ensure that applicants can reasonably afford the monthly rent. A common guideline is that tenants should earn at least two-and-a-half to three times the monthly rent in gross income. Income verification may include reviewing: Recent pay stubs Employment verification Bank statements Tax returns for self-employed applicants This step helps ensure the tenant's financial situation supports consistent rent payments. Professional property management uses income verification to reduce the risk of late rent or financial hardship. Rental History and Previous Landlord References Past rental behavior is often one of the best indicators of future tenant behavior. Property managers typically contact previous landlords to verify information such as: Payment history Lease compliance Property condition upon move-out Whether the landlord would rent to the tenant again A strong rental history suggests the applicant understands tenant responsibilities and has demonstrated reliability in the past. Experienced property managers in Long Beach California pay close attention to rental history because it can reveal patterns that credit reports alone may not show. Background Screening and Compliance Background screening may also be part of the tenant evaluation process. This can include criminal history checks conducted in compliance with fair housing regulations. It is important that background screening is performed consistently and in accordance with local and state laws. California and many cities have regulations governing how criminal records can be considered in rental decisions. Professional property management companies in Long Beach stay current on these regulations to ensure that screening practices remain compliant. This protects property owners from potential legal risks related to discriminatory screening practices. Establishing Clear Rental Criteria Before screening applicants, property managers establish clear rental criteria. These criteria outline the minimum standards applicants must meet to qualify for the property. Typical criteria may address: Minimum income requirements Credit history expectations Rental history standards Occupancy limits By establishing criteria in advance, property managers ensure that all applicants are evaluated fairly and consistently. Clear criteria also help set expectations for applicants and streamline the approval process. The Importance of Fair Housing Compliance Tenant screening must always comply with federal, state, and local fair housing laws . Landlords cannot discriminate based on protected characteristics such as race, religion, national origin, disability, familial status, gender, sexual orientation, or other protected categories under California law. Professional property management in Long Beach California includes careful adherence to fair housing regulations throughout the screening process. Consistent procedures help ensure compliance while protecting property owners from legal exposure. Why Professional Tenant Screening Matters Tenant screening requires experience, attention to detail, and knowledge of legal guidelines. Many landlords underestimate how complex the process can be. Evaluating applications while maintaining compliance with fair housing laws and local regulations requires careful procedures. A property management company in Long Beach brings established systems and experience to the screening process. This helps property owners avoid common mistakes while improving the chances of placing the best tenants for their rental . When screening is handled professionally, landlords can feel more confident that their rental property is in good hands. The Long-Term Value of Careful Tenant Placement A good tenant can make rental ownership significantly easier. Responsible tenants pay rent on time, maintain the property, and communicate effectively when maintenance issues arise. Careful screening increases the likelihood of finding tenants who will remain in the property long-term. Long-term tenants reduce turnover costs , minimize vacancy periods, and create more stable rental income. Professional property management companies understand that tenant placement is one of the most important decisions in the entire rental process. How Beach Cities Management Screens Tenants At Beach Cities Management, our rental property management in Long Beach includes a structured tenant screening process designed to protect both property owners and tenants. Our screening procedures include: Comprehensive rental applications Credit and income verification Rental history checks Fair housing compliant evaluation standards Our goal is to place qualified tenants who will respect the property and maintain consistent rent payments. Ready for Professional Tenant Screening and Leasing? If you want help leasing and managing your rental property, professional Long Beach property management can simplify the process and reduce risk. Apply today through our **Owner Application** . Let Beach Cities Management handle tenant screening, leasing, and property management so you can focus on building long-term investment success.
How a well-written lease protects Long Beach landlords and tenants, what it must include, and how professional property management keeps leases compliant.
