Holding vs. Selling: What Should You Do?

You have a property that you’re not living in yourself, so what should you do - sell it or hold onto it? 

This is a question that you might encounter if you’ve inherited a home, you’re moving out of a home, or you’ve had a rental property for some time now, and you’re not sure you want to hang onto it. 

There are plenty of advantages for holding and there are an equal number of benefits that come with selling. The right decision really depends on your investment goals, the state of the current market, and what you’re willing to sacrifice to follow one path instead of the other. 

Choosing to sell or hold isn’t just about timing the market. It’s about aligning your assets with your overall strategy. 

Even if you’re new to investing, you understand that real estate is an illiquid investment, meaning your money is tied up in the property until you sell or refinance. That makes this decision even more impactful. If you sell too soon, you might miss out on appreciation. If you hold too long, you may tie up capital that could be used elsewhere.

Understanding both sides of the equation helps you make an informed choice.

Making the Case for Holding Your Property

Many investors buy with the intention of holding long-term. The “buy and hold” strategy has been the cornerstone of real estate wealth-building for decades, and for good reason. Most investors and experts would agree that the longer you hold onto a property, the more you can potentially earn with it. Here are the best reasons to hold and why it may be particularly challenging for some.

• Pros of Holding Your Property

1. Steady Cash Flow. Rental income provides ongoing monthly revenue. If your property is cash-flow positive (meaning rent covers expenses with profit left over), it can serve as a reliable source of income.

2. Long-Term Appreciation. Historically, real estate values tend to increase over time. By holding, you’re giving your property time to appreciate, potentially multiplying your return on investment.

3. Tax Benefits. Owners can take advantage of tax deductions, including mortgage interest, property taxes, repairs, and depreciation. These benefits can make holding onto a property financially advantageous.

4. Inflation Hedge. Rents often rise with inflation, meaning your rental income could increase over time while your mortgage payments remain fixed (if you have a fixed-rate loan).

5. Building Equity. Every mortgage payment reduces principal, increasing your ownership stake. The longer you hold, the more equity you build.

6. Avoiding Transaction Costs. Selling a property comes with costs: agent commissions, closing fees, and possible capital gains taxes. By holding, you delay or avoid these expenses.

• Cons of Holding Your Property

1. Ongoing Responsibilities. Being a landlord requires time, effort, and sometimes stress. Even with property management, there’s oversight, repairs, and tenant turnover to handle.

2. Market Volatility. While real estate generally appreciates, values can stagnate or decline during downturns. Holding too long in a weak market may limit your overall gains.

3. Tied-Up Capital. Your money is locked into the property. If another promising investment arises, you may not have the liquidity to take advantage.

4. Unexpected Expenses. From major repairs to rising property taxes, holding a property always comes with financial risks.

5. Opportunity Cost. Holding may prevent you from diversifying. For example, you could potentially earn more by reallocating your funds into multiple properties or other asset classes.

That’s how it looks when we’re talking about holding onto the property that you’ve inherited or the property that you once lived in yourself but no longer need. If you want to hold your property, these are the benefits and the challenges. 

Making the Case for Selling Your Property

Sometimes selling is the best financial decision. Whether you’ve built significant equity, reached your investment goals, or simply want to pivot strategies, selling can free up resources and reduce risk. Let’s take a look at what selling might look like.

• Pros of Selling Your Property

1. Unlocking Equity. Selling provides access to the cash you’ve built up. You can use it for new investments, paying down debt, or other financial goals.

2. Taking Advantage of Market Conditions. If the market is hot and prices are high, selling may allow you to maximize your profit.

3. Reducing Risk. Selling eliminates risks like declining values, tenant challenges, and costly repairs. You’re no longer exposed to potential market or management issues.

4. Rebalancing Your Portfolio. Sometimes, selling makes sense to diversify. You may want to move capital into different property types, new markets, or even other investment vehicles like stocks or businesses.

5. Lifestyle Flexibility. If you’re tired of being a landlord, selling can free up both time and energy.

• Cons of Selling Your Property

1. Transaction Costs. Realtor commissions, staging, inspections, and closing costs can eat into profits.

2. Capital Gains Taxes. Selling often triggers taxes on the profit, unless you use a 1031 exchange to defer them.

3. Loss of Future Income. Once you sell, you lose the ongoing rental cash flow and future appreciation potential.

4. Reinvestment Risk. If you don’t have a clear plan for your proceeds, your money may sit idle or be invested in something with lower returns.

5. Emotional Attachment. For some owners, properties hold sentimental value. Selling can feel like giving up more than just an asset.

Selling can be a clean break, giving you the opportunity to complete one project and begin another. 

Key Factors That Should Influence Your Decision

There isn’t a one-size-fits-all answer. As we will repeatedly tell the investors who come to us with this question, the best choice depends on your unique situation. We cannot tell you what to do. But, we can share some of the major factors that we would encourage you to consider when making this decision:

• Market Performance

Is this a seller’s market? If so, you may get top dollar for your property. But in a buyer’s market, it may make more sense to hold and wait for appreciation. Watch interest rates, local demand, and inventory levels. All of these things affect property values.

• Your Investment Goals

Why are you in the real estate business? If your goal is long-term wealth building, holding may align better with your strategy. If your goal is quick profit or capital for other investments, selling could be the smarter choice.

• Cash Flow Needs

Often, the decision comes down to money. Do you need cash now for another opportunity, debt reduction, or personal expenses? Selling unlocks capital, and that can be a big factor in which way you decide to go. If your property is cash-flow positive and you don’t need the cash immediately, holding may be the better option.

• Property Performance

If your property is already on the rental market and it consistently underperforms (negative cash flow, high vacancy, constant repairs), selling may save you from ongoing losses. But if it’s performing well and requires minimal oversight, holding is appealing.

• Tax Considerations

Selling may trigger capital gains taxes, but a 1031 exchange allows you to defer taxes by reinvesting in another property. Long-term ownership offers depreciation benefits and tax deductions that make holding more lucrative.

• Personal Circumstances

Retirement, relocation, or changes in financial goals all impact whether you should hold or sell. If you’re nearing retirement, selling may free up cash for lifestyle expenses.

It’s important to remember you’re not limited to holding forever or selling outright. Some investors choose a blended approach. You could refinance instead of selling, which will allow you to access equity without losing the benefits of ownership. This gives you cash for new investments while keeping the property’s income and appreciation potential. 

It’s also possible to do a partial portfolio adjustment. If you own multiple properties, you might sell underperforming ones while holding onto strong performers. We always like to talk with owners and investors about the appeal of a 1031 Exchange. This allows you to shake up your portfolio and defer capital gains taxes.

Now that you’ve read our insights, should you hold or sell? 

We hope you can see that there isn’t a universal answer to this question. The decision depends on a range of personal and financial factors, including current market conditions, your investment goals, and whether you need to free up cash for other opportunities. 

For some owners, holding the property long-term provides stability and consistent cash flow. For others, selling unlocks equity, reduces risk, and allows for new investments.

These are very general considerations, and we’d be happy to provide some specific thoughts and recommendations based on your unique circumstances. Please contact us at Property Services of Atlanta to discuss your options further.