When Should You Sell Real Estate? Timing the Market for Maximum Profit
Getting into real estate investing is one thing. Knowing exactly when to exit for maximum profit is another skill entirely. After interviewing Dr. Bharat Sangani, a cardiologist turned real estate mogul who has completed over $3.7 billion in commercial transactions, I discovered two surprisingly simple strategies that have guided his exits across multiple market cycles for over three decades.
The Quick Answer
Follow the banks and follow your returns. When lenders start tightening restrictions on a specific asset class, it signals the beginning of market decline—sell before liquidity dries up completely. Simultaneously, exit when you can replace your current investment’s returns with a less risky alternative that produces equivalent or better cash flow.
How Do You Know When It’s Time to Sell Your Real Estate Investment?
The decision to sell can feel agonizing, especially after pouring time, capital, and sweat equity into stabilizing a property. Many investors, myself included, struggle with emotional attachment to deals that are performing well. Dr. Sangani shared a framework that removes emotion from the equation.
The Banking Secret: Follow the Money
“Always follow the money. That means always follow the bank,” Dr. Sangani explained during our conversation. “When the bank starts putting constraints about lending, the first time you recognize that you need to sell.”
This strategy works because banks possess sophisticated market intelligence and risk assessment capabilities that individual investors lack. When major lenders begin restricting loans for a particular asset class, it signals that institutional money is retreating. Once that happens, buyer liquidity evaporates rapidly.
Dr. Sangani maintains relationships with banking contacts specifically for this purpose. He asks them one simple question: “Which segment of real estate are you going to slow down lending?” That single data point triggers his exit strategy.
The inverse holds true for entry timing. When banks are lending freely on an asset class, that’s your signal to get in. As Dr. Sangani put it: “I just ask them where are you lending today freely, and you say well we lend freely in the hotel boom—that is the time to get into it.”
This approach has helped him navigate multiple real estate cycles successfully over 30 years. While he’s occasionally been caught in downturns, understanding how real estate cycles work allows him to simply wait 5-7 years for the next upswing rather than panic selling at the bottom.
The Returns Replacement Method
The second exit trigger is purely mathematical. Dr. Sangani recommends evaluating whether you can replace your current returns with a less risky investment.
“We say okay, we are now getting 10 dollars on our 100 dollar investment every year,” he explained. “Then we need to say okay is there any other investment which can also produce—if I sold this asset and I got 10 extra dollars—whatever I will invest if it is going to produce 10 percent return, I should get out of this.”
The critical qualifier is less risky. This framework prevents you from chasing higher returns into more dangerous investments. You’re not looking for 15% returns with double the risk. You’re looking for 10% returns with half the risk.
For investors focused on building passive income through real estate, this strategy ensures you’re always optimizing your risk-adjusted returns rather than just holding properties out of habit or hope.
What Asset Classes Should Real Estate Investors Focus On Today?
Dr. Sangani has invested across nearly every commercial real estate category: multifamily, retail, hospitality, office, mixed-use, gas stations, and truck stops. His portfolio strategy involves recognizing that every asset class experiences cycles.
“Every dog has a day,” he noted. “There are some sectors of real estate that are in vogue and they fall down and they eventually come back. Real estate is a cycle, as you know and I know. And the cycles are usually seven to 10 years.”
Why Multifamily Still Wins
When I asked which asset class he’d choose if all were equally attractive, his answer was unequivocal: multifamily real estate.
The reasons are demographic and structural. The average age of a first-time homebuyer has climbed to 40 years old, up significantly from previous generations. Rising home prices and interest rates have priced millions of potential buyers out of ownership, forcing them into the rental market for longer periods.
“People who are up to 40 years old, they have no place to go except multifamily,” Dr. Sangani explained. This creates sustained demand that underpins the asset class.
Florida: The Standout Market for Multifamily
For geographic focus, Florida dominates Dr. Sangani’s current interest for multifamily specifically. The state benefits from continuous population influx, favorable weather, and the demographic factors mentioned above.
“People are still constantly coming in,” he noted. “That particular situation is going to be like that for a while. That’s why I really love Florida.”
However, investors should be cautious about overbuilt sectors. While multifamily in Florida remains strong, other asset classes like self-storage have experienced oversupply in certain markets. Always conduct thorough market analysis and due diligence before committing capital.
Should You Invest in Real Estate During Economic Uncertainty?
We’re currently navigating an unusual environment: elevated interest rates, unpredictable policy changes, and geopolitical volatility. Dr. Sangani’s advice for these times is refreshingly conservative.
The Cash Flow Rule for Uncertain Times
“These are the times the novices, the people who don’t have any experience, the inexperienced people will fall prey. They will lose money,” he cautioned. “These are very uncertain times.”
His rule: only invest in deals that produce cash flow today, not tomorrow or five years from now.
“Wherever you can invest today and start getting return tomorrow, that is the investment you want to do,” Dr. Sangani emphasized. “If somebody says invest today we will develop this 5 years later is going to make lot of money, you tell that guy bless you.”
This principle echoes throughout successful real estate investing. Speculation on future appreciation is gambling. Investing in proven cash flow is business. For investors interested in development deals, this means focusing on projects with pre-leasing, committed tenants, or immediate revenue generation.
Risk Tolerance in Volatile Markets
Dr. Sangani acknowledges he doesn’t have the risk tolerance for speculative deals during uncertain times. That’s not criticism of those who do—it’s self-awareness.
“I am not criticizing who are doing that, I am just not the guy who has that kind of risk tolerance to do it,” he said.
Understanding your own risk profile is fundamental to long-term success. New investors often overestimate their risk tolerance until they experience their first major downturn. Starting with cash-flowing assets builds both capital and confidence before venturing into more speculative territory.
How Can Professionals Transition Into Real Estate Investing?
Dr. Sangani’s story offers a blueprint for high-income professionals looking to diversify beyond their primary careers. He started as a cardiologist working 24/7, making $1 million annually in 1988. When his father-in-law unexpectedly returned to India after building a 64-room hotel in Gulfport, Mississippi, Dr. Sangani’s wife Smitha took over operations.
Working just two hours daily, she generated $400,000 in net profit the first year.
That experience taught him that real estate could match or exceed his medical income with far less time investment. But the transition wasn’t purely luck—it required three critical elements.
The Three Requirements for Professional Investors
When I asked what advice he’d give his younger self, Dr. Sangani outlined three prerequisites for professionals entering real estate:
Time: Do you have the bandwidth to manage investments while maintaining your primary career? Most professionals don’t, which is why turnkey real estate investing or passive syndications make sense initially.
Money: “The minor capital doesn’t work. Real estate is no joke. You must have significant amount of capital,” he stressed. Undercapitalization is a primary failure mode for new investors who can’t weather unexpected expenses or market downturns.
Expertise: Most professionals lack real estate knowledge initially. “That’s why you need a mentor,” Dr. Sangani advised. Whether through formal coaching programs or partnership with experienced operators, bridging the knowledge gap is essential.
For doctors, attorneys, executives, and other high-income professionals, the path often involves starting with passive investments in syndications before transitioning to active investing once you’ve built capital and knowledge.
What’s the Best Way to Find High-Quality Real Estate Deals?
After three decades in business, Dr. Sangani’s deal flow primarily comes through reputation and strategic partnerships rather than marketing or cold outreach.
Reputation as Deal Flow
“Number one way is just being in the business, do what you said you would do and the deals come to you,” he explained. “People know that if they transacted with Encore, we will close the deal.”
This highlights the importance of consistency and integrity. Every closed deal, every kept commitment, builds your reputation in the market. Sellers and brokers remember operators who close reliably versus those who tie up properties and back out. Building this reputation takes years but pays dividends in off-market deal flow.
Co-GP Partnerships: Scaling with Operators
Dr. Sangani has increasingly utilized co-GP (co-general partner) structures to deploy capital efficiently while leveraging younger operators’ energy and deal-finding capabilities.
“We have gone and people who been in this business for decade or more, but there is my alter ego 30 years ago where I had all the energy, had all the power, I had all the hardworking attitude, I just didn’t have enough money,” he explained.
Encore provides $250 million in committed capital over five years to vetted operators who source and execute deals. This structure benefits both parties: experienced operators get the capital they need, while Encore gets access to high-quality deals without the day-to-day grind.
For younger investors with energy but limited capital, seeking co-GP relationships with established investors can accelerate your portfolio growth dramatically. For established investors looking to scale, this model offers leverage without hiring large teams.
Understanding how to structure development deals or partnerships is crucial for maximizing this approach.
What Lessons Did You Learn From Deals That Went Wrong?
“If somebody says I’ve done 100 deals and not a single deal has gone sour on me, either he hasn’t done 100 deals or he’s lying,” Dr. Sangani said bluntly. Every experienced investor accumulates scars from deals that didn’t perform as expected.
The Critical Lesson: Capitalize Properly
The recurring theme in failed deals is undercapitalization. Markets turn, expenses exceed projections, tenants default, and construction runs over budget. Without sufficient reserves, you’re forced to sell at the worst possible time or inject emergency capital at unfavorable terms.
“You should have enough capital so when the downturn comes you just survive and when the upturn comes you exit out,” Dr. Sangani advised.
This capital cushion doesn’t just protect against losses—it positions you to capitalize on distressed opportunities when others are forced to sell. The investors who thrive during downturns are those who maintained liquidity while others overleveraged.
Conviction Before Commitment
“Don’t get into the deal till you are 100 percent convinced that this is what you want to do,” he emphasized. “My dad used to say, son measure twice and cut once.”
Once committed, maintain conviction unless fundamental facts change. Markets will fluctuate, valuations will swing, and doubts will creep in. Having thoroughly underwritten the deal before purchase gives you the confidence to hold through temporary adversity.
For investors just starting out, this discipline is even more critical. Take time to learn how to analyze deals properly before deploying capital.
What Was Your Best Real Estate Deal Ever?
Dr. Sangani’s favorite deal occurred three days before the 2007 subprime crisis. He was closing a mid-nine-figure acquisition financed through a major wirehouse with GE Capital providing $300 million in debt.
Three days before closing, GE Capital pulled the plug completely. Lehman Brothers had just filed bankruptcy, and the credit markets froze overnight.
The wirehouse called Dr. Sangani expecting to renegotiate or cancel. His response: “If I read the agreement right, I don’t think we have a problem. You have a problem, because we don’t have financing contingency.”
The seller wrote a check for a mid-nine-figure sum with zero debt, giving Dr. Sangani a fully paid asset precisely as the market collapsed and no one else had capital to deploy.
“Three days later, nobody had money. And I was sitting on nine figure cash,” he recalled. “That’s when all these new divisions were started and the company grew.”
This story illustrates the power of positioning. While the timing involved luck, the structure—negotiating a deal without financing contingency—created the opportunity. When markets dislocate, having committed capital and closed deals puts you in an extraordinary position.
How Are You Using AI in Your Real Estate Business?
While Dr. Sangani hasn’t yet implemented AI in ways that dramatically impact his bottom line, he recognizes its inevitability.
“Whether you agree or don’t agree, the AI has crept into our lives,” he acknowledged. “It will be foolish to think that AI is a fad and it’s going to go away. I think it is here to stay and we will have to embrace it. And if we don’t embrace it and if we don’t change with time, I think the outcome may not be good for us.”
For investors looking to implement AI practically, consider applications in:
- Due diligence and contract review (I recently used AI to analyze a cell tower lease I’d never encountered before)
- Market research and comp analysis
- Underwriting automation and sensitivity analysis
- Property management and tenant communications
- Marketing and content creation
The investors who master AI tools for real estate in the next few years will have significant competitive advantages in efficiency, speed, and analytical capability.
Key Takeaways for Real Estate Investors
Dr. Sangani’s journey from $10.45 in his pocket as an immigrant to controlling billions in real estate assets offers actionable wisdom:
Timing exits is more art than science, but follow two rules: Watch when banks tighten lending on specific asset classes (that’s your sell signal), and exit when you can replace returns with less risky alternatives.
Every asset class has cycles: Don’t chase trends. Understand that real estate sectors move in 7-10 year cycles. If you miss the exit, hold through the downturn rather than panic selling.
Focus on cash flow, especially in uncertain times: Speculative deals that promise future returns are gambling. Invest only in assets producing cash flow today.
Undercapitalization kills deals: Have enough reserves to survive downturns. The investors who thrive are those who maintain liquidity when others are overleveraged.
Reputation drives deal flow: Consistency, integrity, and closing deals as promised builds the reputation that eventually brings opportunities to you.
Know your risk tolerance: Be honest about what level of risk you can stomach psychologically and financially. There’s no shame in conservative investing—only in pretending you’re comfortable with risk you’re not.
For professionals looking to enter real estate investing, remember the three requirements: time, money, and expertise. Most importantly, find mentors who’ve navigated the journey you’re beginning.
Recommended Resources
Dr. Sangani recommends two essential books for aspiring real estate investors:
For general life wisdom: How to Win Friends and Influence People by Dale Carnegie. This book shaped Dr. Sangani’s approach more than any other.
For real estate fundamentals: What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinoli. This teaches the essential language—cap rates, NOI, IRR—that every investor must understand.
For investment strategy: The ABCs of Real Estate Investing by Ken McElroy. Once you understand the fundamentals, this guides you on where and how to invest.
Connect With Dr. Bharat Sangani
Dr. Sangani offers mentorship programs for investors looking to learn from his three decades of experience across $3.7 billion in transactions. Visit his website at www.bharatsangani.com to explore mentorship opportunities and connect directly.
As he humbly puts it: “God has been very kind to me and society has made me who I am. I am not that smart, I just have lot of experiences.”
Want to learn more about the REI Club Podcast? Click here: https://www.therealestateinvestingclub.com
Want to grow your business with ads? Join our sister company here: https://www.kaizenmarketingagency.com
Want to invest in Gabe’s next deal? Click here: https://www.kaizenpropertiesusa.com
Want to join our community of active investors? Click here: https://linktr.ee/gabepetersen