When do you sell your commercial property?

Many members heard me say on many occasions: “I want you to think that you will never sell the property. Buy it as if you will hold on to it for ever. One should never sell a good commercial property”. So periodically I get emails from members asking me: “So when do you sell your commercial property?”

 You should consider selling your property if one or more of the following conditions exists: 

1)      The property is too small to manage efficiently 

2)      The area has reached its growth and looks like it is shifting in direction hence growth maybe delayed or avoided for many years to come 

3)      The money/equity can leverage a bigger asset with better lending terms in a more favorable area 

4)      There is a better use for the money somewhere else. 

5)      You need the money for some emergency and cannot access it unless you sell  

6)      The property has become too much of a hassle for the returns 

7)      Area/neighborhood is changing and values are declining with no end in sight  

8)      You received a ridiculously great offer to sell that you probably cannot get such an offer again soon and could use the money elsewhere 

9)      There are some tax incentives making the sale today more profitable than sale in the future  

10)  If you could sell to your corporation to get some added tax advantages or re-start a new depreciation schedule 

In closing, if you must sell consider repositioning the property or upgrading it first, to get the maximum price and always consider reinvesting the money through a 1031 exchange to defer taxes. 

Wishing you the best ROI, 

Cherif Medawar

ICRE, Founder